Sage Hill Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1.2 million on March 1, $0.9 million on June 1, and $3 million on December 31. Sage Hill Company borrowed $1.3 million on March 1 on a five-year, 12% note to help finance the building construction. In addition, the company had outstanding all year a $2-million, five-year, 14% note payable and a $3.4-million, four-year, 18% note payable.

Calculate the appropriate capitalization rate on general borrowings that would be used for capitalization of borrowing costs.