Transanomics Corp recently issued at par value 5-year bonds with a par value of $500,000, dated January 1, 2015 and bearing an interest at an annual rate of 10% payable quarterly on March 31, June 30, September 30 and December 31st. The initial journal entry made by Transanomics Corp. was:

Cash 500,000

Bonds Payable 500,000

What is the ANNUAL effective rate of these bonds?