Task 1. 10 points max

ABC Company is constructing a building. Construction began on January 1 and was completed on December 31.

Expenditures were $ 1,400,000 on March 1, $1,200,000 on June 1, $ 750,000 on September 1, and $2,000,000 on December 31.

ABC Company borrowed $ 800,000 on January 1 on a 7-year, 11% note to help finance construction of the building. In addition, the company had outstanding all year an 8%, 5-year, $2,500,000 note payable and an 12%, 4-year, $5,000,000 note payable.

Answer the following questions and show your computations!

1. What are the weighted-average accumulated expenditures?
2. What is the weighted-average interest rate used for interest capitalization purposes?
3. What is the avoidable interest for the company?
4. What is the actual interest for the company?
5. What amount of interest should be capitalized and what amount charged to expense?