Question

Pronghorn Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of € 4,100,000 on January 1, 2022. Pronghorn expected to complete the building by December 31, 2022. Pronghorn has the following debt obligations outstanding during the construction period.

Construction loan- 8% interest, payable semiannually, issued December 31, 2021	€ 1,650,000
Short-term loan- 6% interest, payable monthly, and principal payable at maturity on May 30, 2023	1,320,000
Long-term loan- 7% interest, payable on January 1 of each  year. Principal payable on January 1, 2026	825,000

Assume that Pronghorn completed the office and warehouse building on December 31, 2022, as planned at a total cost of € 4,290,000. The following expenditures were made during the period forthis project: January 1, € 825,000; April 1, € 1,225,000; July 1, € 1,625,000; and October 1, € 540,000. Excess funds from the construction loans were invested during the period and earned € 17,000 of investment income. Compute the amount of borrowing costs to be capitalized for this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)