In: Accounting
Coronado Company is constructing a building. Construction began
on February 1 and was completed on December 31. Expenditures were
$1,872,000 on March 1, $1,272,000 on June 1, and $3,046,500 on
December 31.
Coronado Company borrowed $1,007,900 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, $2,397,800 note
payable and an 10%, 4-year, $3,714,900 note payable. Compute
avoidable interest for Coronado Company. Use the weighted-average
interest rate for interest capitalization purposes.
(Round percentages to 2 decimal places, e.g. 2.51% and
final answer to 0 decimal places, e.g. 5,275.)
01-Mar | 1,872,000.00 | 10/12 | 1,560,000.00 |
01-Jun | 1,272,000.00 | 7/12 | 742,000.00 |
31-Dec | 3,046,500.00 | - | - |
6,190,500.00 | 2,302,000.00 |
2,397,800.00 | 9% | 215,802.00 |
3,714,900.00 | 10% | 371,490.00 |
6,112,700.00 | 587,292.00 |
Weighted Average rate = 587,292/6112700 = 9.61
Avoidable Interest
1,007,900.00 | 12% | 120,948.00 |
1,294,100.00 | 9.61% | 124,333.69 |
245,281.69 |