Discount-Mart issues $20 million in bonds on January 1, 2015. They have a ten-year term and pay interest semiannually. This is the partial bond amortization schedule for the bonds.

Date	Cash Paid	Interest Expense	Increase in Carrying Value	Carrying Value
1/1/15				$17,881,197
6/30/15	$1,200,000	$1,251,684	$51,684	17,932,881
12/31/15	1,200,000	1,255,302	55,302	17,988,183
6/30/16	1,200,000	1,259,173	59,173	18,047,356
12/31/16	1,200,000

What is the stated annual rate of interest on the bonds?

14%.

6%.

12%.

13%.