Weighted average cost of capital solution
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Hanson Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,680,000 on March 1, $1,260,000 on June 1, and $3,044,000 on December 31.
Hanson Company borrowed $1,167,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,598,000 note payable and an 11%, 4-year, $3,397,000 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 2.25.)
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Solution Summary
The solution, in addition to solving the given problem, provides a template for solving for weighted average cost of capital in Excel.
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