Oceanwide Enterprises, Inc., is involved in building and operating cruise ships. Each ship is identified as a separate discrete job in the accounting records. At the end of 2010, Oceanwide correctly reported $5,400,000 as Construction in Progress on the following jobs.

Construction costs for 2011, and the dates the expenditures were made, were as follows:

Oceanwide had the following general liabilities at December 31, 2011:
12%, 5-year note (maturity date'2013) . . . . . . . . . . . . . . . . . . . . . $2,000,000
10%, 10-year bonds (maturity date'2016) . . . . . . . . . . . . . . . . . . . 8,000,000
On January 1, 2011, Oceanwide borrowed $2,000,000 specifically for the construction of ship 343. The loan was for three years with interest at 13%.

Instructions:
1. Compute the maximum interest that can be capitalized in 2011.
2. Compute the weighted-average interest rate for the general liabilities for 2011.
3. Compute the interest that Oceanwide should capitalize during2011.

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Completion Date (end of month) Accumulated Costs (including 2010 interest) December 31, 2010 Ship 340 341 342 343 .October 3.2010 $2,300,000 1,150,000 1,200,000 June 30, 2011 .September 30, 2011 January 31. 2012 750,000 Ship Date Costs 341 342 343 344 345 April 1, 201I May 1, 2011 July 1, 2011 September I. 2011 November . 2011 $1,200,000 1.600,000 2,200,000 810,000 360,000