Stenson & company loans its sole shareholder, Ralph Stenson, $100,000 for 10year with no stated interest rate. At the time the loan is made, the current AFR short-Term, mid term, and long term rates are 6.75%, 7.6% percent, and 8.4 percent, respectively.

a) Compute the deemed payment if the terms of the loan require that Ralph pay a three percent annual rate of interest, compounded semiannually.

b) How does the deemed payment affect Stenson Taxable Income

c) How does the deemed payment affect Ralph Taxable Income