Question: Exercise 2 10 points max Dessin Company is constructing a building. Construction began on January 1, 2012 and was completed on December 31, 2012. Expenditures

Exercise 2 10 points max Dessin Company is constructing a building. Construction began on January 1, 2012 and was completed on December 31, 2012. Expenditures were:

March 1, 2012 $750,000

June 1, 2012 200,000

September 31, 2012 350,000

October 1, 2012 100,000

December 31, 2012 250,000

Company borrowed $1,300,000 on January 1 on a 7-year, 11% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 4-year, $2,800,000 note payable and an 10%, 4-year, $3,400,000 note payable.

a) What are the weighted-average accumulated expenditures?

b) What is the weighted-average interest rate used for interest capitalization purposes?

c) What is the avoidable interest for the company?

d) What is the actual interest for the company?

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