At the beginning of the year Frank loaned $90,000 to his daughter, Linda, payable on demand without interest. Linda used $80,000 to retire an outstanding home mortgage and invested the remaining $10,000 in a money market account yielding 2 percent interest ($200 for the year). Assuming that the $200 of interest is Linda\'s only investment income for the year and that the applicable Federal rate (AFR) is 3 percent, how much imputed interest income must Frank report this year as a result of the loan?

$2,700 

$300 

$200 

0