Answer | |
Step-1 | Average Accumulated Expenditure = $72,00,000 / 2 = $3600,000 |
Step-2 | Weighted Average of cost of borrowing = |
(2400000 * 10%) + (4800000 * 7%) | |
576000 / (2400000+4800000) = 8%. | |
Step-3 | Interest capitalized first includes Interest on construction loan = $1800000*11% = $198,000 |
Balance = 3600000-1800000 = 1800000 * 8% = $144,000 | |
Step-4 | Total Interest Capitalized = $198,000 + $144000 = $342,000 |
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