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Pharoah Company is constructing a building. Construction began on February 1 and was completed on December...

Pharoah Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,824,000 on March 1, $1,224,000 on June 1, and $3,030,540 on December 31.

Pharoah Company borrowed $1,082,950 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 5-year, $2,046,800 note payable and an 10%, 4-year, $3,555,500 note payable. Compute the weighted-average interest rate used for interest capitalization purposes

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Expert Solution

I have calculated the average rate of capitalization through proper wworking notes , and highlighted the importanat points in yellow .

Feel free to reach out for any questions .

Thanks

ekkarill92 answered 1 year ago
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