On january 1, 2018, the company obtained a $3 million construction loan with a 10% interest rate. the loan was outstanding all of 2018 and 2019. the company’s other interest-bearing debt included two long-term notes of $5,900,000 and $7,900,000 with interest rates of 7% and 9%, respectively. both notes were outstanding during all of 2018 and 2019. interest is paid annually on all debt. the company’s fiscal year-end is december 31. assume the $3 million loan is not specifically tied to construction of the building. required:
1. calculate the amount of interest that mason should capitalize in 2018 and 2019 using the weighted-average method.
2. what is the total cost of the building?
3. calculate the amount of interest expense that will appear in the 2018 and 2019 income statements.

Asmall town wants to build some new recreational facilities. the proposed facilities include a swimming pool, recreation center, basketball court and baseball field. the town council wants to provide the facilities which will be used by the most people, but they face budget and land limitations. the town has $400,000 and 14 acres of land. the pool requires locker facilities which would be in the recreation center, so if the swimming pool is built the recreation center must also be built. also, the council has only enough flat land to build the basketball court or the baseball field. the daily usage and cost of the facilities (in $1,000) are shown below. which facilities should they build? facilityusagecost ($1,000)landswimming pool4001002recreation center5002003basketball court3001504baseball field2001005