OrioleFurniture Company started construction of a combination office and warehouse building for its own use...
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OrioleFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $9,500,000 on January 1, 2020. Oriole expected to complete the building by December 31, 2020. Oriole has the following debt obligations outstanding during the construction period.
| Construction loan-12% interest, payable semiannually, issued December 31, 2019 | $3,800,000 | |
| Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021 | 2,850,000 | |
| Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 | 1,900,000 |
Assume that Oriole completed the office and warehouse building on December 31, 2020, as planned at a total cost of $9,880,000, and the weighted-average amount of accumulated expenditures was $6,840,000. Compute the avoidable interest on this project.
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