Calculating Actual Interest and Weighted Average Interest Rate
Weighted average accumulated expenditures are $200,000 on a project for which work steadily progressed during the current year. The following debt was outstanding during the current year.
| Construction loan | $50,000 at 10% | |
| Note payable | $200,000 at 8% | |
| Mortgage payable | $75,000 at 12% |
a. Compute the total actual interest expense for the
current year.
b. Compute the weighted average interest rate on the
general debt.
Round percentages to two decimal places (for example, enter 2.05
for 2.04555%).
Answer%
| a.) | Interest Expense | ||
| Construction loan | 5,000 | =50000*10% | |
| Note Payable | 16,000 | =200000*8% | |
| Mortgage Payable | 9,000 | =75000*12% | |
| Total Actual Interest Expense | $ 30,000 | ||
| b.) | Total General Debt | 275,000 | =200000+75000 |
| Total Interest on general Debt | 25,000 | =16000+9000 | |
| Weighted Average interest rate on General Debt | 9.09% | =25000/275000 | |
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