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