## Answers

2018 | 2019 | ||||

Interest Capitalized | $ 2,13,750 | $ 4,03,406 | |||

Interest Expense | $ 14,86,250 | $ 12,96,594 | |||

Total cost of building | $ 89,72,156 | ||||

Workings: | |||||

Weighted Average rate of all debt:- | |||||

$ 30,00,000 | X | 14% | = | $ 4,20,000 | |

$ 60,00,000 | X | 8% | = | $ 4,80,000 | |

$ 80,00,000 | X | 10% | = | $ 8,00,000 | |

$ 1,70,00,000 | $ 17,00,000 | ||||

Weighted Average rate of all debt = | 10.00% | ||||

($1700000/ $17000000) | |||||

Expenditure for 2018 | |||||

Jan 1,2018 | $ 10,70,000 | X | 12/12 | = | $ 10,70,000 |

March 1, 2018 | $ 8,40,000 | X | 10/12 | = | $ 7,00,000 |

June 30, 2018 | $ 3,80,000 | X | 6/12 | = | $ 1,90,000 |

October 1, 2018 | $ 7,10,000 | X | 3/12 | = | $ 1,77,500 |

$ 30,00,000 | $ 21,37,500 | ||||

Interest Capitalized in 2018 | |||||

$ 21,37,500 | X | 10.00% | = | $ 2,13,750 | |

Expenditure for 2019 | |||||

Jan 1, 2019 ($3000000 + $213750) | $ 32,13,750 | X | 9/9 | = | $ 32,13,750 |

Jan 31, 2019 | $ 11,70,000 | X | 8/9 | = | $ 10,40,000 |

April 30, 2019 | $ 14,85,000 | X | 5/9 | = | $ 8,25,000 |

August 31. 2019 | $ 27,00,000 | X | 1/9 | = | $ 3,00,000 |

$ 85,68,750 | $ 53,78,750 | ||||

Interest Capitalized in 2019 | |||||

$ 53,78,750 | X | 10.00% | X 9/12 | = | $ 4,03,406 |

Cost of Building | |||||

Expenditure for 2018 | = | $ 30,00,000 | |||

Interest Capitalized in 2018 | = | $ 2,13,750 | |||

Expenditure for 2019 | = | $ 53,55,000 | |||

Interest Capitalized in 2019 | = | $ 4,03,406 | |||

Total cost of building | = | $ 89,72,156 | |||

Interest Expense for 2018: | |||||

Total Interest Incurred | = | $ 17,00,000 | |||

Less : Interest Capitalized | = | $ 2,13,750 | |||

2018 Expense | = | $ 14,86,250 | |||

Interest Expense for 2019: | |||||

Total Interest Incurred | = | $ 17,00,000 | |||

Less : Interest Capitalized | = | $ 4,03,406 | |||

2019 Expense | = | $ 12,96,594 |

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