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Compute avoidable interest for Pharoah Company

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Question - Pharoah Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,700,000 on March 1, $1,800,000 on June 1, and $4,500,000 on December 31.

Pharoah Company borrowed $1,500,000 on March 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $3,000,000 note payable and an 11%, 4-year, $5,250,000 note payable. Compute avoidable interest for Pharoah Company. Use the weighted-average interest rate for interest capitalization purposes.

Reference no: EM132719036

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