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 fund 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 Roy pays on the mortgage will be deductible by him. Considering only the tax consequences, answer the following. a. The loan guarantee: Hal's interest income from the CDs would be $ 5,250 before taxes and $ 3,570 after taxes. Roy's interest expense from the bank loan would be $ 6,000 before taxes and $ 5,280 after taxes. This arrangement would produce an overall negative cash flow after taxes to the family of $ 1,710 . b. The loan from Hal to Roy: Hal's tax on the imputed interest income from the loan to Roy would be 1,440 Roy's tax benefit from the imputed interest expense from Hal's loan would be $ X. This arrangement would produce an overall negative cash flow after taxes to the family of $ X. c. Which option will maximize the family's after-tax wealth? The loan from Hal to Roy