Eastern builders company is constructing a building. Construction began Jan 1 an

Question

Eastern builders company is constructing a building. Construction began Jan 1 and was completed December 31. Expenditures were $3,600,000 on April 1, $2,400,000 on July 1 and $3,000,000 on December 31. the company borrowed $10,200,000 on Jan 1 on a 5yr, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 3-yr, $5, 800,000 note payable and an 11%, 4 -year, $8,000,000 note payable.

What are the weighted-average accumulated expenditures?

A. $3,900,000.00

B. $4,150,000.00

C. $6,000,000.00

D. $9,000,000.00

Explanation / Answer

Date Amount Time period Weighted-average accumulated expenditures Apr-01 3600000 9/12 2700000 Jul-01 2400000 6/12 1200000 Dec-31 3000000 0 0 3900000 Option A is correct

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