how do you calculate the imputed interest income and expense? It's not making sense

Problem 447 (LO. 4, 5) Roy decides to buy a personal residence and goes to the bank for a $150,000 loan. The bank tells him that he can borrow the funds at 4% if his father will guarantee the debt. Roy's father, Hal, owns a $150,000 CD currently yielding 3.5%. The Federal rate is 3%. Hal agrees to either of the following: Roy borrows from the bank With Hal's guarantee to the bank. Hal cashes in the CD (with no penalty) and lends Roy the funds at 2% interest. Hal is in the 32% marginal tax bracket. Roy, Whose only source of income is his salary, is in the 12% marginal tax bracket. The interest RCW pays on the mortgage will be deductible by him. Considering only the tax consequences, answer the following. a. The loan guarantee: before taxes and Hal's interest income from the CDs would be 3,360 X after taxes. before taxes and a Roy's interest expense from the bank loan would be This arrangement would produce an overall negative cash flow after taxes to the family of b. The loan from Hal to Roy: Hal's tax on the imputed interest income from the loan to Roy Would be 2,040 X . Roy's tax benefit from the imputed interest expense from Hal's loan would be 2,640 X . 1,553 4,328 fter taxes. x. x. This arrangement would produce an overall negative cash flow after taxes to the family of c. Which option Will maximize the family's after-tax wealth? The loan trom Hal to Roy X