On January 2, 2014, Indian River Groves began construction of a new citrus proce

Question

On January 2, 2014, Indian River Groves began construction of a new citrus processing plant. The automated plant was finished and ready for use on September 30, 2015. Expenditures for the construction were as follows:

Indian River Groves borrowed $2,200,000 on a construction loan at 12% interest on January 2, 2014. This loan was outstanding during the construction period. The company also had $8,000,000 in 9% bonds outstanding in 2014 and 2015.

What were the weighted-average accumulated expenditures for 2015 by the end of the construction period?

January 2, 2014 $ 400,000 September 1, 2014 1,200,000 December 31, 2014 1,200,000 March 31, 2015 1,200,000 September 30, 2015 800,000

Explanation / Answer

Indian River Groves All Amounts in $ 30 September 2015 Date Nature Amount No. of days Weighted of Expense Incurred till 30.09.15 Expenditure till 30.09.15 2 January 2014 Construction Exp 400000 637.00 698082.19 2 January 2014 Construction Loan 2200000 637.00 460734.25 Interest on Construction Loan 1 September 2014 Construction Exp 1200000 395.00 1298630.1 31 December 2014 Construction Exp 1200000 274.00 900821.92 31 March 2015 Construction Exp 1200000 184.00 604931.51 30 September 2015 Construction Exp 800000 1.00 2191.7808 Interest for Bonds in 2014 716054.79 Calculated from January 2 till December 31 in 2015 540000 Calculated from January 1 till September 30 Weighted Average Accumulated Expenses 5221446.6

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