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Loay WLL has borrowed BD2.4million to finance the building of a factory. Construction is expected to take two years. The loan was drawn on 1
Loay WLL has borrowed BD2.4million to finance the building of a factory. Construction is expected to take two years. The loan was drawn on 1 January 2020 and work began on 1 March 2020. BD1 million of the loan was not utilised until 1 July 2020 so Loay was able to invest it until needed.
Loay WLL is paying 8% on the loan and can invest surplus funds at 6%.
Which is the borrowing cost to be capitalised for the year ended 31 December 2020 in respect of this project?
BD140,000
BD100,000
BD192,000
BD162,000
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