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On January 1, 2016, Morton Sales Co. issued zero-coupon bonds with a face value of $6.2 million for cash. The bonds mature in 10 years and were issued at a price of $3,462,018.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

1.

Required:

What was the annual effective interest rate in the market when the bonds were issued?