On January 1, 2018, the Mills Conveying Equipment Company began construction of a building to be used as its office headquarters.

The building was completed on June 30, 2019.

Expenditures on the project in 2018, mainly payments to subcontractors, were as follows:

1/1/2018 $3,000,000

5/1/2018 $1,000,000

9/1/2018 $2,000,000

12/1/2018 $2,000,000

On January 1, 2018, the company obtained a $4 million construction loan with an 8% interest rate. The loan was outstanding during the entire construction period.

The company had other interest bearing debt (outstanding during the entire construction period), as follows:

10% bond $10,000,000

11% long term note $5,000,000

Required:

What amount of interest should be capitalized in 2018, using the specific interest method?