Question

Sheffield Corp. is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6450000 on March 1, $5350000 on June 1, and $8250000 on December 31. Sheffield Corp. borrowed $3250000 on January 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 8%, 3-year, $6410000 note payable and an 9%, 4-year, $12750000 note payable. What are the weighted-average accumulated expenditures

Answer 1

$8,495,833

Step-by-step explanation:

Calculation of weighted-average accumulated expenditures

Date Payments Funds used Annualized Amount

Mar 1 $6450000 10/12 $6450000*10/12 $5,375,000

Jun 1 $5350000 7/12 $5350000*7/12 $3,120,833

Dec 31 $8250000 0/12 $$8250000*0/12 $0

Weighted Average Expenditures $8,495,833