Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity:

Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 $ 194,758 06/30/2021 $ 7,000 $ 7,790 $ 790 195,548 12/31/2021 7,000 7,822 822 196,370 06/30/2022 7,000 7,855 855 197,225 12/31/2022 7,000 7,889 889 198,114 06/30/2023 7,000 7,925 925 199,039 12/31/2023 7,000 7,961 961 200,000

What is the Coupon/Stated annual rate of interest on the bonds?

Group of answer choices

6%.

3%.

3.5%.

7%.