Pepper Mnfg is constructing a new warehouse . Construction began on May 1 and was completed on December 31. Expenditures were $2,300,000 on August 1, $824,000 on September 1, and $1,750,200 on December 31. Pepper Mnfg borrowed $1,200,500 on June 1 on a 5-year, 10% note to help finance construction of the warehouse.
In addition, Pepper has outstanding all year a 7%, 5-year, $3,525,100 note payable and an 10%, 8-year, $1,905,000 note payable. Compute the avoidable interest for Pepper Mnfg. Use the weighted-average interest rate for interest capitalization.
This is not a graded assignment but I practice question