On January 1, 2017, Wells Tech signed a $950,000 two-year construction contract. Wells secured $950,000 financing at 7%. In 2017, Wells paid out $650,000; average accumulated expenditures was $375,000. Excess borrowed funds were invested, yielding $120,000 income. What should Wells report as capitalized interest at December 31, 2017?

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A :

$ 66,500

B :

$120,000

C :

$ 26,250

D :

$75,000