Kingbird Company is constructing a building. Construction began on February 1 an

Question

Kingbird Company is constructing a building. Construction began on February 1 and was completed on December 31.

Expenditures were $2,004,000 on March 1, $1,284,000 on June 1, and $3,024,560 on December 31. Kingbird Company borrowed $1,101,510 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, $2,417,700 note payable and an 11%, 4-year, $3,702,800 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 7.58%.)

Weighted-average interest rate %

Explanation / Answer

Loan terms Principal Interest 12%,5 years 1101510 132181.2 10%,5 years 2417700 241770 11%, 4 years 3702800 407308 7222010 781259.2 Weighted average interest rate 0.10817753 Total interest 781259.2 Total principal 7222010 Total interest/total principal (781259.20/7222010) 0.10817753 Weighted average interest rate 0.1082 or 10.82%

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.