On january 1 2012 abc borrowed 1200000 at 10 payable

Reference no: EM13607324

On January 1, 2012, ABC borrowed $1,200,000 at 10% payable annually to finance the construction of a new building. In 2012, the company began construction on March 1 and made the following expenditures throughout the year: March 31 $260,000 June 1 $750,000 July 1 $1,300,000 Nov 1 $1,200,000 The building was completed on December 31, 2012. Additional information is provided below: 1. Other Debt consisted of a $4,000,000, 10-year, 12% bond issued December 31, 2007 with interest payable annually; and a $1,600,000, 6-year, 9% note dated December 31, 2010 with interest due annually. (Note: When determining your average interest rate, round to two decimal places. If your average interest is .14374, use 14.37%.)

Required:

a. Determine the original cost of the building (round your answer up to the nearest whole dollar)

b. Determine Interst Expense for 2012 (round your answer to the nearest whole dollar):

c. If instead, ABC had only $200,000 of other debt outstanding inclurring interest at 12% APR, determine how much interest can be capitalized

Reference no: EM13607324

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