Famco issued a 5%, 5 year, $500,000 serial bond on January 1, 2017. There are actually 5, $100,000 bonds, with one bond due each December 31 starting December 31, 2017. Interest is also paid annually on each December 31. The bonds were sold at 102. Issue costs were $500. Calculate the effective interest rate Record the December 31, 2017 payment of principle and interest