Answer:
The company can avoid $ 252,075.03 of interest expense
Explanation:
<em><u>construction capitalized interest</u></em>:
We need to do an average of the capitalized cost for the building considering the time outstandings:
mar-01 1,908,000.00 x 10/12 = 1,590,000.00
jun-01 1,308,000.00 x 7/12 = 763,000.00
dic-01 3,010,600.00
<em> 2,353,000.00 </em>
Now we calculatethe specifit borrowing interest:
especific borrowings:
$ 1,015,500 x 0.11 = 110,012.50
non-specifit borrowings
2,353,000 -1,015,500 = 1,337,500.00
We solve for average rate:
average rate
principal rate interest
$2,195,200 0.1 $219520
$3,604,500 0.11 $396495
$5,799,700 $616015
total interest / total principal = average rate = 0.106214977
capitalized interest:
1,337,500 x 0.106214977 = <em>142,062.53 </em>
total interest capitalized
110,012.50 + 142,062.53 = 252,075.03