How much is the capitalizable borrowing cost for enervate co

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Reference no: EM132817675

General borrowing

On January 1, 20x1, ENERVATE TO WEAKEN Company had the following borrowings made for general purposes and a part of the proceeds was used to finance the construction of a qualifying asset.

Principal

12% short-term note ? 40,000,000

14% bank loan (3-year) 72,000,000

16% note payable (5-year) 88,000,000

The construction of the qualifying asset was started on immediately and expenditures incurred on the qualifying asset were as follows:

Jan. 1 ?19,200,000

Mar. 31 8,800,000

July 30 14,000,000

October 1 21,600,000

December 31 1,200,000

Problem 1: How much is the capitalizable borrowing cost?

a. 28,960,000

b. 7,556,423

c. 5,362,428

d. 0

Reference no: EM132817675

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