Answer:
A.$2,251,000
B.9.59%
Explanation:
A.Indigo Company
Payment Fund used Annualized
1st March $1,836,000 10/12 $1,530,000
1st June $1,236,000 7/12 $721,000
Total qualifying for interest capitalization 2,251,000
($1,530,000 +721,000)
B.Indigo Company
Specific loan: Funds for project $1,112,250× 12% interest 133,470
Other loans:For the rest:$2,342,100 9%
Interest 210,789
$3,467,800 10%Interest 346,780
$3,467,800 +$2,342,100 =$5,809,900
$346,780 +$210,789=$557,569
Weighted average rate for other loans
=$557,569 /$5,809,900
= 9.59%
Therefore the weighted-average interest rate used for interest capitalization purposes will be 9.59%
