Response to the following problem:
On January 1, the Reyes loaned their daughter, Rachael, $25,000 so that she could open up her own business. The terms of the loan require Rachael to pay her parents back the $25,000 in three years. No interest is being charged on the loan. The AFR for short, medium, and long-term loans is 4%, 5.5%, and 6%, respectively.
The imputed interest on the loan in the current year is -- 0 -- $1010 -- $1000 -- $1375 -- $1394.
Provide step by step calculations.