Hanson Company is constructing a building. Construction began on February 1 and

Question

Hanson Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,860,000 on March 1, $1,308,000 on June 1, and $3,048,900 on December 31.

Hanson Company borrowed $1,143,600 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 9%, 5-year, $2,423,400 note payable and an 10%, 4-year, $3,710,000 note payable. Compute avoidable interest for Hanson Company. Use the weighted-average interest rate for interest capitalization purposes.

Avoidable interest $ ?

Explanation / Answer

Hanson Company is constructing a building. Construction began on February 1 and

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