Oriole Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,884,000 on March 1, $1,284,000 on June 1, and $3,049,820 on December 31.
Oriole Company borrowed $1,038,290 on March 1 on a 5-year, 13% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,241,900 note payable and an 11%, 4-year, $3,500,300 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 7.58%.)
Weighted-average interest rate:
Amount | Interest rate | Interest | |
10%, 5-year note | 2241900 | 10% | 224190 |
11%, 4-year note | 3500300 | 11% | 385033 |
Total | 5742200 | 609223 | |
Weighted-average interest rate | 10.61% | =609223/5742200 |
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