Question

Kareem loaned his daughter Veneia $200,000 at a rate of 2% compounded annually. Assume that the...

Kareem loaned his daughter Veneia $200,000 at a rate of 2% compounded annually. Assume that the Federal rate applicable to the loan is 5% through June 30 and 6% from July 1 through December 31. Kareem makes the loan on January 1, and the loan is still outstanding on December 31.

Calculate the imputed interest on this loan to Kareem.

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Answer #1
Kareem loaned     200,000
Interest loan for June 30 (200000*5%*6/12)          5,000
Total     205,000
Interest loan for December 31 (205000*6%*6/12)          6,150
Total balance     211,150
Interest loan for June 30 (200000*5%*6/12)          5,000
Interest loan for December 31 (205000*6%*6/12)          6,150
Total imputed interest       11,150
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