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Janet borrowed $120,000 from her sister, Karen, to pay off some significant personal debts. Karen agreed to loan the money to Janet at an annual

Janet borrowed $120,000 from her sister, Karen, to pay off some significant personal debts. Karen agreed to loan the money to Janet at an annual interest rate of only two percent. The current applicable federal rate (AFR) is five percent. What is the amount of the imputed (foregone) interest on the loan? A. $6,000 B. $3,600 C. $2,400 D. $0

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