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Business, 17.04.2020 00:04 jodiconklin2358

Sylvester Co. takes out a 12% loan of $500,000 on 1/1/year 4 to finance construction of a building for the company’s own use. Construction begins immediately, and $600,000 is spent on the construction at an even pace during year 4. Another $400,000 is spent at an even pace during year 5, with construction completed on 12/31/year 5. No other construction loans are taken out. Sylvester incurred unrelated interest expenses of $10,000 and $15,000 in year 4 and year 5, respectively, on loans that bear interest at 10%. How much interest can Sylvester capitalize in year 4 and year 5?

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Sylvester Co. takes out a 12% loan of $500,000 on 1/1/year 4 to finance construction of a building f...
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