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40) On June 1, 2017, the Crocus Company began construction of a new manufacturing plant. The plant was completed on October 31, 2018. Expenditures on

40) On June 1, 2017, the Crocus Company began construction of a new manufacturing plant. The plant was completed on October 31, 2018. Expenditures on the project were as follows ($ in millions):

July 1, 2017

54

October 1, 2017

22

On July 1, 2017, Crocus obtained a $70 million construction loan with a 6% interest rate. The loan was outstanding through the end of October, 2018. The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 8%. This note was outstanding during all of 2017 and 2018. The company's fiscal year-end is December 31.

What is the amount of interest that Crocus should capitalize in 2017, using the specific interest method? 40) _____

A) $1.90 million.

B) $2.96 million.

C) $1.95 million.

D) None of these answer choices are correct.

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