With the given information below, how to find the interest cost in year 1,2 and 3? An investment company is planning to invest by buying over an existing hotel.

Some information concerning their project:

Land will be purchased for a value of 7.5 millions ;

A building will be constructed for a total value of 42 millions, estimated value after 10 years : 12 millions ;

Equipment will be purchased for a value of 12 millions and will be completely depreciated over a period of 8 years ,

Other investments are estimated to be 4,5 millions and will be completely depreciated after 5 years. This investment includes the purchase of the basic inventories, opening costs, etc

Revenues of the first year (365 days in a year) of operations are estimated as follow :

o Rooms division : 198 rooms per day at 500 francs per night

o Restaurant : 260 covers per day at averagely 100 francs per cover

o Breakfast : 150 covers per day at 20 francs each

o Banquet and convention centre : 4 millions

An annual increase of 2% is expected ;

The F&B costs are forecasted at 35% of F&B revenue ;

Salaries and wages, including social charges, are forecasted at 40% of the total revenues ;

Other operating costs, excepted depreciation costs and interest costs, are forecasted to be 16,000,000, increasing by 2% per year ;

The income tax rate is of 35%

The investment expenses are as follow :

o Year -1 : 85%

o Opening : 15%

This project is financed as follow : 65% by contracting a mortgage, 35% with owners capital stock

The mortgage contracted determines a interest rate of 5% and a fixed reimbursement of 3,5 millions, 1st payment at the end of year 1

A dividend of 5% will be distributed to the shareholders starting from year 1