Question
Larkspur Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1.5 million on March 1, $1.2
Larkspur Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1.5 million on March 1, $1.2 million on June 1, and $4 million on December 31.
Larkspur Company borrowed $1.3 million on March 1 on a five-year, 13% note to help finance the building construction. In addition, the company had outstanding all year a $3-million, five-year, 13% note payable and a $3.4-million, four-year, 16% note payable. Calculate the appropriate capitalization rate on general borrowings that would be used for capitalization of borrowing costs. (Round answer to 2 decimal places, e.g. 52.75%.)
Capitalization Rate | enter Capitalization Rate in percentages rounded to 2 decimal places % |
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