Answer:
weighted expenditures 54,350
avoidable interest 6,522
capitalized interest 6,522
interest revenue 2,725
Total Interest expense 12,310
Step-by-step explanation:
217,400 paid to Misk and capitalized until Nov 1st:
August, September, October: 3 months
217,400 x 3/12 = 54,350 weighted expenditures
We apply to this the specific borrowing rate:
54,350 x 12% = 6,522
Interest revenue
amount invested: 326,400 - 217,400 = 109,000
at 10% for a period of 3 month:
109,000 x 10% x 3/12 = 2,725
Interest expense:
326,400 x 12% x 5/12 = 16,320
31,400 x 8% x full-year = 2,512
avoidable interest (6,522)
Total Interest expense 12,310