A building was constructed last year for Agro Co. for use as a production facility. Construction...

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A building was constructed last year for Agro Co. for use as a production facility. Construction began on January 1 and was completed on December 31. The payments to the contractor were as follows. Date Payment 1/1 $500,000 3/31 800,000 9/30 1,000,000 11/1 600,000 To finance construction of the building, a $1,500,000, 12% construction loan was taken out on January 1. The loan was repaid on December 31. The firm had two sources of general debt: $800,000 note payable, 8% annual interest, and $1,200,000 par value bonds, 10% annual interest. Determine the amount of interest to be capitalized A building was constructed last year for Agro Co. for use as a production facility. Construction began on January 1 and was completed on December 31. The payments to the contractor were as follows. Date Payment 1/1 $500,000 3/31 800,000 9/30 1,000,000 11/1 600,000 To finance construction of the building, a $1,500,000, 12% construction loan was taken out on January 1. The loan was repaid on December 31. The firm had two sources of general debt: $800,000 note payable, 8% annual interest, and $1,200,000 par value bonds, 10% annual interest. Determine the amount of interest to be capitalized

Answer rating: 100% (QA)

To determine the amount of interest to be capitalized we need to calculate the weighted average accu... View the full answer