Answer:
$207,800
Explanation:
Date Expenditure Weight Average
January 1 $980,000 12/12 $980,000
March 31 $1,580,000 9/12 $1,185,000
June 30 $1,256,000 6/12 $628,000
Sept. 30 $980,000 3/12 $245,000
Dec. 31 $780,000 0/12 <u>$0 </u>
Total <u>$3,038,000</u>
<u>Calculation of average interest rate for general debt</u>
Amount Rate Interest
Bonds $8,000,000 11% $880,000
Long term rate <u>$2,000,000</u> 6% <u>$120,000</u>
Total <u>$10,000,000</u> <u>$1,000,000</u>
Average interest rate = $1,000,000 / $10,000,000
Average interest rate = 10%
<u>Calculation of interest capitalized</u>
Note: General debt = $3,038,000 - $2,400,000 = $638,000
Average Interest rate Capitalized interest
Specific debt $2,400,000 6% $144,000
General debt $638,000 10% <u>$63,800</u>
Total <u>$207,800</u>
