Determine the amount of interest to be capitalized

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Question - 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 $400,000

4/1 500,000

8/1 600,000

10/1 300,000

To finance construction of the building, a $750,000, 10% construction loan was taken out on January 1. The loan was repaid on December 31. The firm had two sources of general debt: $400,000 note payable. 9% annual interest, and $500,000 par value bonds, 7.5% annual interest. Determine the amount of interest to be capitalized.

Reference no: EM133052833

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