Gidi Professional Institute is constructing a Tuition Center at Aboabo that will take about 18 months to complete. The company commenced construction on 2 January 2018.

The following payments were made during the year: GH000

31 January 40,000

31 March 90,000

30. June 20,000
31. October 40,000

30 November 50,000

The first payment on 31 January was funded from the companys pool of debts. However, the company succeeded in raising Medium-Term Loan Notes for an amount of GH160,000,000 on 31 March 2018 at a simple interest rate of 9 percent per year, calculated and payable monthly in arrears.

These funds were specifically used for the construction. Excess funds were temporarily invested at 6 percent monthly in arrears and payable in cash. The pool of debts was again used for a GH40,000,000 payment on 30 November 2018 which could not be funded from the Medium-Term Loan Notes. The construction project was temporarily halted for three weeks in May 2018 when substantial technical and administrative work was carried out.

The following amounts of debts were outstanding at the reporting date of 31 December 2018:

	GH000
Medium-Term Loan Notes	160,000
Bank Overdraft	240,000

10% 7-year Notes 1/10/2018 with simple interest payable annually at 31 Dec 1,800,000

For the bank overdraft, the weighted average amount outstanding during the year was GH150,000,000 and the total interest charged by the bank amounted to GH6,760,000 for the year.

Required

Calculate the total amount of interest to be capitalised (5 marks)