Interest During Construction

Dexter Construction Corporation is building a student condominium complex; it started construction on January 1, Year 1. Dexter borrowed $1 million specifically for the project by issuing a 10%, 5-year, $1 million note, which is payable on December 31 of Year 3. Dexter also had a 12%, 5-year, $3 million note payable and a 10%, 10-year, $1.8 million note payable outstanding all year.

In Year 1, Dexter incurred costs as follows:

January 1. $300,000

March 1. 600,000

June 301,000,000

November 1480,000

Calculate Dexter's capitalized interest on the student condominium complex for Year 1.

Capitalized interest = $