ompute the avoidable interest on this project. (Us
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Loan name |
Loan amount |
Interest rate |
Interest payment frequency |
12% Construction Loan |
2,200,000 |
12% |
Semi Annually |
10% Short term loan |
1,540,000 |
10% |
Monthly |
11% Long term loan |
1,100,000 |
11% |
Annually |
Total cost |
5,720,000 |
Weighted average of Accumulated expenditure |
3,960,000 |
Avoidable Interest = weighted-average accumulated expenditures up to the principal balance of specific borrowing * interest rate on that specific borrowing + weighted-average accumulated expenditures in excess of specific borrowing * weighted-average interest rate.
Loan name |
Loan amount |
Interest rate |
Interest payment frequency |
Annual Interest |
Effective Interest rate |
10% Short term loan |
1,540,000 |
10% |
Monthly |
147,134(Note-1) |
|
11% Long term loan |
1,100,000 |
11% |
Annually |
121,000 |
|
2,640,000 |
268,134 |
268,134/2,640,000 * 100=10.1565% |
Note:-1 calculation For 10% Short term loan
Month | Principal | Interest @ 10%/12 | Closing Balance |
1 | 1,540,000 | 12,833 | 1,527,167 |
2 | 1,527,167 | 12,726 | 1,514,441 |
3 | 1,514,441 | 12,620 | 1,501,821 |
4 | 1,501,821 | 12,515 | 1,489,306 |
5 | 1,489,306 | 12,411 | 1,476,895 |
6 | 1,476,895 | 12,307 | 1,464,588 |
7 | 1,464,588 | 12,205 | 1,452,383 |
8 | 1,452,383 | 12,103 | 1,440,280 |
9 | 1,440,280 | 12,002 | 1,428,278 |
10 | 1,428,278 | 11,902 | 1,416,376 |
11 | 1,416,376 | 11,803 | 1,404,573 |
12 | 1,404,573 | 11,705 | 1,392,868 |
147,134 |
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