Chapter 15 Problem 15-20
Date Expenditure Months Amount
January 1 2,000,000 12 24,000,000
June 30 2,000,000 6 12,000,000
December 31 1,000,000 0 -____
5,000,000 36,000,000
Average expenditures (36,000,000 x 12) 3,000,000
Average capitalization rate (1,060,000 / 8,000,000) 13.25%
Expenditures on building 5,000,000
Interest (3,000,000 x 13.25%) 397,500
Total cost of building 5,397,500
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