Question

Long-Lived Assets

Part A: in 2018, Mar-Vell Enterprises (MVE) began constructing a building to house it’s new hyperdrive division. As of Jan. 1, 2018, MVE has two general loans outstanding. Loan A is a zero-coupon $15,000,000 loan due in 2028 with a market rate of 10%. Loan B is 7.5% coupon, $12,500,000 loan due in 2020 with a market rate of 9%. During 2019, MVE made payments to the construction company of $900,000 on july 1, $2,400,000 on sep. 1, and $3,600,000 on dec. 31. At the end of the year, the account is determining how much interest can be capitalized. What is the amount of weighted-average funding needs that provides the basis for determining capitalized interest?

1. 3,300,000

2. 6,900,000

3. 2,625,000

4. 1,250,000

5. 900,000

Answer 1

Ans;$1250,000 is Correct Answer

Explanation:

900,000*6//12]+[2,400,000*4/12]+
450,000+800,000=1250,000

Note:Amount paid at the end of the last day is not to be taken into account