Reference no: EM132695391
Jojo Company loaned P 2,500,000 from the bank for a construction of a building during the year 2020. The construction started on January 1 and was completed on December 31. The specific loan amount did not suffice the expenditures for the building so Jojo used funds from other existing loans. The currently existing general purpose loans were: (The missing interest rate is 12%)
Notes payable, 10%, (for general purposes) P3,000,000
Notes payable, 10%, general borrowings 2,000,000
Notes payable, 12%, general borrowings 3,000,000
Expenditures for the construction in 2020 were:
January 1 P2,500,000
March 1 1,200,000
September 1 1,500,000
November 1 800,000
Round-off all computed % to nearest one percent and round off all peso figures to the nearest one peso.
Required:
Problem 1: Compute the capitalizable borrowing cost.