on june 1, 2023, a company began construction of a new manufacturing plant. the plant was completed on october 31, 2024. expenditures on the project were as follows ($ in millions): july 1, 2023 90 october 1, 2023 58 february 1, 2024 66 april 1, 2024 39 september 1, 2024 38 october 1, 2024 24 on july 1, 2023, the company obtained a $124 million construction loan with a 10% interest rate. the loan was outstanding through the end of october, 2024. the company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 11%. this note was outstanding during all of 2023 and 2024. the company's fiscal year-end is december 31. in computing the capitalized interest for 2024, the average accumulated expenditures are:

This is calculated by taking the sum of all expenditures on the project up to a particular point in time, and dividing by the number of months that have passed since construction began.

The expenditures on the project were as follows:

July 1, 2023: $90 million

October 1, 2023: $58 million

February 1, 2024: $66 million

April 1, 2024: $39 million

September 1, 2024: $38 million

October 1, 2024: $24 million

The total expenditures on the project were $90 million + $58 million + $66 million + $39 million + $38 million + $24 million = $315 million.

The construction began on June 1, 2023 and the plant was completed on October 31, 2024, so the total duration of the project was October 31, 2024 - June 1, 2023 + 1 month = 18 months.

The average accumulated expenditures for 2024 can then be calculated as follows:

Average accumulated expenditures = Total expenditures / Number of months

= $315 million / 18 months

= $17.5 million/month

Thus, the average accumulated expenditures for 2024 are $17.5 million/month. This amount can then be used to calculate the capitalized interest for the year.

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