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:DateCash PaidInterest ExpenseDecrease in Carrying ValueCarrying Value01/01/2021 $104,212 12/31/2021$7,000 $6,253 $747 103,465 12/31/2022 7,000 6,208 792 102,673 12/31/2023 7,000 6,160 840 101,833 12/31/2024 7,000 6,110 890 100,943 12/31/2025 7,000 6,057 943 100,000 What is the annual stated interest rate on the bonds?
A. 7%.
B. 3%.
C. 6%.
D. 3.5%.
Answer: A
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