$(5$ points$)$ A building was constructed last year for Agro Co$.$ for use as a production facility. Construction began on January $1$ and was completed on December $31.$ The payments to the contractor were as follows.

Date

Payment

$1/1$

$$500,000$

$3/31$

$800,000$

$9/30$

$1,000,000$

$11/1$

$600,000$

To finance construction of the building, a $$1,000,000,12\%$ construction loan was taken out on January $1.$ The loan was repaid on December $31.$ The firm had two sources of general debt:$$ $$800,000$ note payable, $8\%$ annual interest, and $$1,200,000$ par value bonds, $10\%$ annual interest.

Determine the amount of interest to be capitalized

$7.(5$ points$)$ A building was constructed last year for Agro Co$.$ for use as a production facility. Construction began on January $1$ and was completed on December $31.$ The payments to the contractor were as follows.

To finance construction of the building, a $\backslash (\backslash$$ $1,000,000,12\backslash \%\backslash )$ construction loan was taken out on January $1.$ The loan was repaid on December $31.$ The firm had two sources of general debt: $\backslash (\backslash$$ $800,000\backslash )$ note payable, $\backslash (8\backslash \%\backslash )$ annual interest, and $\backslash$$$1,200,000$ par value bonds, $\backslash (10\backslash \%\backslash )$ annual interest.

Determine the amount of interest to be capitalized