On January 1, Year 7, Bob the Builder issues a 10-year bonds with face value of $100,000 at 103. However, the net proceeds from the issuance of bonds is only $102,000 because the company had to pay $1,000 issue costs. Annual rate of 6% coupon is paid at July 1 and January 1. The company records its bonds at amortized cost and uses effective interest rate method. What is effective interest rate for the bonds?