Question 10

Crane Companyis constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6300000on March 1, $5250000on June 1, and $7950000on December 31.Crane Companyborrowed $3150000on January 1 on a 5-year,10% note to help finance construction of the building. In addition, the company had outstanding all year a8%, 3-year, $6350000note payable and an9%, 4-year, $11950000note payable.

What is the weighted-average interest rate used for interest capitalization purposes?

a)8.50%

b)8.65%

c)9.00%

d)8.85%