During 2007, Naylor Building Company constructed various assets at a total cost of $8,400,000. The weighted average accumulated expenditures on assets qualifying for capitalization of interest during 2007 were $5,600,000. The company had the following debt outstanding at December 31, 2007:

Instructions
Compute the amounts of each of the following (show computations).
1. Avoidable interest.
2. Total interest to be capitalized during 2007.

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|1. 10%, 5-year note to finance construction of various assets, dated January 1, 2007, with interest payable annually on January 1 $3,600,000 2. 12%, ten-year bonds issued at par on December 31, 2001, with interest payable annually on December 31 3. 9%, 3-year note payable, dated January 1, 2006, with interest payable 4,000,000 annually on January 1 2,000,000