Company started construction of a combination office and warehouse building for its own use at an estimated cost of $14,000,000 on January 1, 2020. Novak expected to complete the building by December 31, 2020. Novak has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2019 $
NovakFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $14,000,000 on January 1, 2020. Novak expected to complete the building by December 31, 2020. Novak has the following debt obligations outstanding during the construction period.
| Construction loan-12% interest, payable semiannually, issued December 31, 2019 | $5,600,000 | |
| Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021 | 4,200,000 | |
| Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 | 2,800,000 |
Assume that Novak completed the office and warehouse building on December 31, 2020, as planned at a total cost of $14,560,000, and the weighted-average amount of accumulated expenditures was $10,080,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)
| Avoidable Interest |
$
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