The following scenario relates to questions 16-19 Goodfood is a supermarket chain. During the current year it started building a new store. The directors are aware that in accordance with IAS23 Borrowing costs certain borrowing costs have to be capitalised. Details relating to the construction of Goodfood's new store: Goodfood took out a 10 million loan with an interest rate of 7.5% per annum on 1 April 2017. The loan was specifically taken to finance the building of the new store which meets the definition of a qualifying asset in IAS23. Construction of the store started on 1 May 2017 and it was completed and ready for use on 28 February 2018. Question: Rather than take out a loan specifically for the new store Goodfood could have funded the store from existing borrowings which are: 10% bank loan of 50 million 8% bank loan of 30 million In this case it would have applied a capitalisation rate to the expenditure on the asset. What would that rate have been? 8.75% 9.25% O O O 10% 9%