Happy Pets bonds have 20 years remaining until maturity. They pay a 10% semiannual coupon and have a face value of $1,000. The current nominal YTM on these bonds is 8.75%. Happy Pets may call the bonds in 5 years at a call price of $1,050. Approximately, what is the nominal YTC? (explain your answer)

1. 9%
2. 4%
3. 16%
4. 8%