Question
rlington Company is constructing a building. Construction began on January 1, 2017 and was completed on October 31, 2017. Expenditures were $3,600,000 on March 1,
rlington Company is constructing a building. Construction began on January 1, 2017 and was completed on October 31, 2017. Expenditures were $3,600,000 on March 1, $2,400,000 on June 30, and $2,000,000 on October 31. Arlington Company borrowed $2,000,000 on January 1 on a 5-year, 4% note to help finance construction of the building. In addition, the company had outstanding all year a 5%, 3-year, $6,000,000 note payable and an 6%, 4-year, $4,000,000 note payable. a. Calculate the weighted-average accumulated expenditures on the construction project. b. Calculate the weighted-average interest rate on the company's debt that does not specifically relate to the project. c. Calculate the avoidable interest. d. Actual interest expense was $620,000. What is the amount of interest to be capitalized?
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