Company R was constructing fixed assets that qualified for interest capitalization. The company had the following outstanding debt issuances during the entire year of construction:

$6,000,000 face value, 8% interest

$8,000,000 face value, 10% interest

None of the borrowings were specified for the construction of the qualified fixed asset. Average expenditures for the year were $1,000,000. What interest rate should the company use to calculate capitalized interest on the construction?

• A.

  8.14%

• B.

  9.00%

• C.

  9.14%

• D.

  10.00%