Pikton plc, a company with a 31st Dec year-end, had the following general borrowings in place at the beginning and end of 20X6. 1 January 20X6 31 December 20X6 m m 10% Bank loan repayable 20X8 120 120 9.5% Bank loan repayable 20X9 80 80 On 1 March 20X6, Pikton plc began construction of a qualifying asset, a piece of machinery for a hydro-electric plant, using existing borrowings. Expenditure drawn down for the construction was 30million on 1 March 20X6 and 20million on 1 October 20X6.

(a) Calculate the weighted average borrowing rate (also known as the capitalisation rate)

(b) Calculate the amount of borrowing costs that can be capitalised for the hydro-electric plant machine for the year ending 31st December 20X6.