What is the total capitalized cost of the aircraft

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Question - On January 1, 2008, Sky Airlines contracted with Dover Aircraft to construct an aircraft to Sky's specifications at a cost of $2,000,000. During 2008, Sky paid Dover $400,000 on January 1, and another $250,000 on September 30. On January 1, Sky borrowed $360,000 at 13% to partially finance the construction, an obligation still outstanding at the end of 2008. The remaining amount paid to Dover was financed from available working capital. Sky has approximately $1,600,000 of additional debt outstanding at an average interest cost of 12%.

Required: What is the total capitalized cost of the aircraft under construction at the end of 2008?

Reference no: EM131763707

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