A special purpose company makes monthly payments for services received from contractors exclusive of value added tax as follows: $50,000, $60,000, $75,000, $85,000, $100,000, $80,000, $60,000, and $40,000. The VAT rate is 12.5%. The SPV receives VAT refunds three (3) months after paying VAT to suppliers and the project is completed in eight (8) months.

b. Assuming VAT refunds are used to reduce the loan, calculate the capitalized interest and the outstanding loan balance after eight months with an interest rate of 8.0%. [12 Marks]