Sunoco Inc. self-constructed a factory building.

- The project began on January 1st, 2021 and was completed on December 31st, 2021.

- A total of $600,000 of expenditures were incurred evenly throughout the year.

- On January 1st, 2021, Sunoco Inc. issued a $450,000 construction loan with a 8.5% to finance the project.

- In addition to the construction loan, Sunoco Inc. had a $900,000 general loan with a 5.75% interest rate outstanding during the year 2021.

Sunoco Inc. follows the specific interest method. How much interest cost should it capitalize during the year 2021?

Multiple Choice

• $38,250.

• $25,500.

• $20,000.

• $17,250.