Doggy Co. began construction of a new cutter for the U.S. Coast Guard on January 1, 2011 and completed construction of the ship on October 31, 2012. To finance construction, Doggy took out an $8,000,000, 2-year 6% construction loan on February 1, 2011. Interest on the loan was to be paid annually on the anniversary date of the loan. Doggy has no other outstanding interest-bearing debt. Doggy made the following expenditures in conjunction with this construction project:
How much interest should Doggy capitalize in 2011 related to the cutter project?
A. $129,000
B. $139,500
C. $440,000
D. $480,000