X2 issued callable bonds on January 1, 2021. The bonds pay interest annually on December 31 each year. X2's accountant has projected the following amortization schedule from issuance until maturity:

Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value

01/01/2021 $123,629

12/31/2021 $ 11,900 $11,127 $ 773 122,856

12/31/2022 11,900 11,057 843 122,013

12/31/2023 11,900 10,981 919 121,094

12/31/2024 11,900 10,898 1,002 120,092

12/31/2025 11,900 10,808 1,092 119,000

What is the annual market interest rate on the bonds?