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										$	115,806
12/31/2021	$	6,660		$	5,790		$	870			114,936
12/31/2022		6,660			5,747			913			114,023
12/31/2023		6,660			5,701			959			113,064
12/31/2024		6,660			5,653			1,007			112,057
12/31/2025		6,660			5,603			1,057			111,000

What is the annual stated interest rate on the bonds?

Multiple Choice

• 6%.

• 3%.

• 5%.

• 2.5%.