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Calculate the appropriate capitalization rate

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Reference no: EM132572227

Question - Teal Mountain Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1.2 million on March 1, $0.9 million on June 1, and $3 million on December 31. Teal Mountain Company borrowed $1 million on March 1 on a five-year, 12% note to help finance the building construction. In addition, the company had outstanding all year a $1-million, five-year, 14% note payable and a $3.7-million, four-year, 16% note payable.

Required - Calculate the appropriate capitalization rate on general borrowings that would be used for capitalization of borrowing costs.

Reference no: EM132572227

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