Question

On January 1, 2021, the company obtained a $3 million loan with a 12% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,200,000 March 1, 2021 690,000 June 30, 2021 450,000 October 1, 2021 660,000 January 31, 2022 945,000 April 30, 2022 1,260,000 August 31, 2022 2,250,000 On January 1, 2021, the company obtained a $3 million construction loan with a 12% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company’s other interest-bearing debt included two long-term notes of $5,500,000 and $7,500,000 with interest rates of 7% and 9%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company’s fiscal year-end is December 31.

What is the total cost of the building?

What is the total cost of the building? ("Round "Weighted-average rate of all debt" to 2 decimal places but do not round other intermediate calculations. Round your answer to the nearest whole dollar.)

	Total cost of building

Answer 1

Ansulent PageNoo Weight Average rate of all debt :- The company will obtained a $3 million loan With 12% intrest rate. $ 30,00,000 X 12% = $ 3,60,000 The company other interest-bearing debt included two long terme notes of $ 5,500,000 and $ 7,500,000 with interest rates of 7% and 9% respectively = $ 5,500,000 X 7% = 3,8 5,000 = $ 7,500,000 90% . = 675,000

PageNo@ Total = $ 30,00,000 + $ 5,500,000 + 4 = $160,00,000 Intrest rates Total = $3,60,000 + 3,85,000+ 6, 75,000 Height Average rate of all debt. = 1420,000 = 14.20,000 160,00,000 %58.8 = Expenditure for 2021 :- Expenditure for 20.2.! Jan 1, 2021 $ 1,200.000 X 12.12 $ 1,200,000 March 1, 20211$ 690.000 X1011242 545.000 June 30,2021 $ 4,30,000! V 6112 = $ 225000 october 1,2001 660000 x 312 165000 $_39,00000| | = $ 2165000

PageNo Intorest Capitalized in 2001 = $ 2165000 X 8.87% = 192035.5 Expenditure for 2012 San. 20.92 $3142,0.35.5 x919 43349210.35:5 than 31,2012 $9u5.000 x819 $ $400.00 April 30, 20.12 $1,260.000 X 519 to $ 700.000 Agust_21, 2012424050,000/ X 119 12$250000 1$7647035.5) _ |=$ 4982035.5_ Jan 1, 20 a 2 ( $ 3000000 i $ 19 2035.5) = $. 319.203515 Intrust Capitalized in 2002 - =$ 4:9,82035.5 X 8.87%.* . = $ 331,429.9116

Page No cost of Building. :- Expenditure for 2021: 30,00,000 Interest Capitalized in 2001 = 192035.5 Expenditure for 2022 Intreat Capitalized in 2022 = 3,31,429.9116 Total cost building = 7978,465,412 Lii Total cost building = $49,78,465.41