How much is the capitalizable borrowing cost

Reference no: EM132817673

Specific borrowing

Problem 1. On January 1, 20x1, HOMILY SERMON Co. borrowed ?20 million to finance the construction of a new building. Interest is payable on the loan at 8%. Stage payments were due throughout the construction period and therefore excess funds were invested during that period. By the end of the project on December 31, 20x1, investment income of ?600,000 had been earned. How much is the capitalizable borrowing cost?

a. 1,600,000

b. 1,000,000

c. 600,000

d. 0

Reference no: EM132817673

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