Consider an unlevered firm with a cost of capital (i.e., expected return on assets) of 9.1%. The firm is considering issuing $220,000 of long-term debt and repurchasing a like amount of equity, so that its new Debt/Equity will be 0.16. If the cost of debt is 4.9%, what will the new cost of equity be? Assume that M&M Proposition II applies and round your answer to the nearest tenth of a percent (If your answer is 3.4% put 3.4 as your answer).