Splish Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,076,000 on March 1, $1,224,000 on June 1, and $3,057,000 on December 31. Splish Company borrowed $1,116,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,075,000 note payable and an 11%, 4- year, $3,717,000 note payable. Compute avoidable interest for Splish Company. Use the weighted-average interest rate for interest capitalization purposes. (Round weighted-average interest rate to 4 decimal places, e.g. 0.2152 and final answer to 0 decimal places, e.g. 5,275.)
Splish Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,076,000 on March 1, $1,224,000 on June 1, and $3,057,000 on December 31. Splish Company borrowed $1,116,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,075,000 note payable and an 11%, 4- year, $3,717,000 note payable. Compute avoidable interest for Splish Company. Use the weighted-average interest rate for interest capitalization purposes. (Round weighted-average interest rate to 4 decimal places, e.g. 0.2152 and final answer to 0 decimal places, e.g. 5,275.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Splish Company is constructing a building. Construction began on February 1 and was completed on December 31.
Expenditures were $2,076,000 on March 1, $1,224,000 on June 1, and $3,057,000 on December 31.
Splish Company borrowed $1,116,000 on March 1 on a 5-year, 12% note to help finance construction of the
building. In addition, the company had outstanding all year a 10%, 5-year, $2,075,000 note payable and an 11%, 4-
year, $3,717,000 note payable. Compute avoidable interest for Splish Company. Use the weighted-average
interest rate for interest capitalization purposes. (Round weighted-average interest rate to 4 decimal places,
e.g. 0.2152 and final answer to 0 decimal places, e.g. 5,275.)
Avoidable interest $
260338
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