1. Discount-Mart issues $10 million in bonds on January 1, 2018. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds:

   Date	Cash Paid	InterestExpense	Increase inCarrying Value	CarryingValue
   1/1/2018				$8,640,967
   6/30/2018	$300,000	$345,639	$45,639	8,686,606
   12/31/2018	300,000	347,464	47,464	8,734,070
   6/30/2019	300,000	349,363	49,363	8,783,433
   12/31/2019	300,000	351,337	51,337	8,834,770

   What is the stated annual rate of interest on the bonds? (Hint: Be sure to provide the annual rate rather than the six month rate.)

   		3%.
   		4%.
   		6%.
   		8%.