American Corporation has two equal shareholders, Mr$.$ Freedom and Brave, Incorporated. In addition to their investments in American stock, both shareholders have made substantial loans to American. During the current year, American paid $$200,000$ interest each to Mr$.$ Freedom and Brave, Incorporated. Assume that American and Brave have $21$ percent tax rates, and Mr$.$ Freedom$$s marginal tax rate on ordinary income is $37$ percent.

Required:

Calculate American$$s tax savings from deduction of these interest payments and their after$-$tax cost.

Calculate Brave$$s tax cost and after$-$tax earnings from its receipt of interest income from American.

Calculate Mr$.$ Freedom$$s tax cost and after$-$tax earnings from his receipt of interest income from American.

Recalculate Brave$$s tax cost and after$-$tax earnings assuming its receipt of interest from American is treated as a constructive dividend.

Recalculate Mr$.$ Freedom$$s tax cost and after$-$tax earnings assuming his receipt of interest from American is treated as a constructive dividend.