Answer:
b. 10.65%
capitalized interest
d. $704,415
actual interest
a. $1,758,000
interest expense
c. $1,053,585
Explanation:
the average cost of debt for general funds:
4,800,000 x 10% = 480,000
9,000,000 x 11% = 990,000
13,800,000 1,470,000
1,470,000 / 13,800,000 = 10.65%
<u>capitalized fund:</u>
4,800,000 x 10/12= 4,000,000
3,960,000 x 7/12 = 2,310,000
total 6,310,000
specifit borrowing: 2,400,000 x 12% = 288,000
remainder 3910000 x 10.65% = 416,415
capitalized cost 704,415
<u>actual interest:</u>
1,470,000 + 288,000 = 1,758,000
<u>interest expense</u>
1,758,000 - 704,415 = 1,053,585
