Dean Foods Co. needs to borrow $23 million for a factory equipment upgrade. Management decides to sell 10-year bonds. They determine that the 3-month Treasury bill yields 4.32 percent, the firm's credit rating is AA, and the yield on 10-year Treasury bonds is 1.06 percent higher than for 3-month bills. Right now, AA bonds are selling for 1.35 percent above the 10-year Treasury bond rate. What is the borrowing cost for this transaction?