Arlington company is constructing a building. construction began on january 1 and was completed on december 31. expenditures were $4,800,000 on march 1, $3,960,000 on june 1, and $6,000,000 on december 31. arlington company borrowed $2,400,000 on january 1 on a 5-year, 12% note to finance construction of the building. in addition, the company had outstanding all year a 10%, 3-year, $4,800,000 note payable and an 11%, 4-year, $9,000,000 note payable. what is the weighted-average interest rate used for interest capitalization purposes? a. 11% b. 10.85% c. 10.5% d. 10.65%what is the avoidable interest for arlington company? a. $288,000 b. $927,615 c. $328,562 d. $704,415what is the actual interest for arlington company? a. $1,758,000 b. $1,782,000 c. $1,470,000 d. $704,415what amount of interest should be charged to expense? a. $765,584 b. $1,470,000 c. $1,053,585 d. $830,384

b. 10.65%

capitalized interest

d. $704,415

actual interest

a. $1,758,000

interest expense

c. $1,053,585

Explanation:

the average cost of debt for general funds:

4,800,000 x 10% = 480,000

9,000,000 x 11% = 990,000

13,800,000            1,470,000

1,470,000 / 13,800,000 = 10.65%

capitalized fund:

4,800,000 x 10/12= 4,000,000‬

3,960,000 x 7/12 = 2,310,000

total                         6,310,000

specifit borrowing: 2,400,000 x 12% = 288,000

remainder              3910000 x 10.65% = 416,415

                                     capitalized cost 704,415

actual interest:

1,470,000 + 288,000 = 1,758,000

interest expense

1,758,000 - 704,415 = 1,053,585

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

hope this

the correct answer is b.)