Question

Joy Corp. builds a new office building. The average accumulated expenditures were 2,000,000. Joy borrows1,500,000 on a construction loan specifically to build the office building. The interest rate on the construction loan is 6

1) $90,000
2) $130,000
3) $160,000
4) $120,000
5) $140,000

Answer 1

Joy Corp. borrowed $1,500,000 for their new office building at an interest rate of 6%, resulting in an annual interest expense of $90,000, corresponding to option 1).

Step-by-step explanation:

The question seems to be related to the calculation of interest on a construction loan taken out by Joy Corp. for building a new office building. Since Joy Corp. borrowed $1,500,000 at an interest rate of 6%, we can calculate the annual interest expense as follows:

Interest Expense = Principal Amount x Interest Rate

Interest Expense = $1,500,000 x 0.06

Interest Expense = $90,000

Therefore, the annual cost of the construction loan for Joy Corp. would be $90,000, which corresponds to option 1).