Answer:
10.63%
Explanation:
Weighted average interest rate for interest capitalization purposes.
10%, 5-year, $2,227,300 note payable
11%, 4-year, $3,799,000 note payable.
Principal
$2,227,300
$3,799,000
Total $6,026,300
Interest
10% × $2,227,300 =$222,730
11% ×$3,799,000 =$417,890
Total $640,620
Weighted average interest rate
$640,620/$6,026,300
=10.63%
Weighted average interest rate for interest capitalization purposes.
Expenditures
March 1 $1,812,000
June 1 $1,212,000
December 31 $3,007,840
Total $6,031,840
Capitalization period ×Expenditure =Weighted average accumulated period
10/12 ×$1,812,000 =$1,510,000
7/12×$1,212,000=$707,000
0
Total $2,217,000
Therefore the weighted-average interest rate for interest capitalization purpose is 10.63%
