Answer:
$105,000
Explanation:
The computation of interest capitalized in 2021 is shown below:-
Average cost of borrowing
= ($2,000,000 × 0.09 + $4,000,000 × 0.06) ÷ $6,000,000
= ($180,000 + $240,000) ÷ $6,000,000
= 7%
Average expenditure during year = $6,000,000 ÷ 2
= $3,000,000
Capitalized interest first eats up the specific construction loan
= 10% × $1,500,000
= $150,000
Therefore the next $1,500,000 is at the average borrowing rate = Construction loan × Average cost of borrowing
= $1,500,000 × 7%
= $105,000
