On june 1, 2017, the crocus company began construction of a new manufacturing plant. the plant was completed on october 31, 2018. expenditures on the project were as follows ($ in millions):

july 1, 2017

54

october 1, 2017

22

february 1, 2018

30

april 1, 2018

21

september 1, 2018

20

october 1, 2018

6

on july 1, 2017, crocus obtained a $70 million construction loan with a 6% interest rate. the loan was outstanding through the end of october, 2018. the company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 8%. this note was outstanding during all of 2017 and 2018. the company's fiscal year-end is december 31.

what is the amount of interest that crocus should capitalize in 2018, using the specific interest method (rounded to the nearest thousand dollars)?

this is the solution for this question:

the correct answer is: [from 2018 ? ($77.95 million × 10/10) + ($30 million × 9/10) + ($21 million × 7/10) + ($20 million × 2/10) + ($6 million × 1/10) = $124.25 million.

of the average accumulated expenditures ($124.25 million), $70 million was financed at 6% for 10 months in 2018, and the remainder of $54.25 million was financed at 8% for that period. the total interest cost was:

($70 million × .06 × 10/12) + ($54.25 million × .08 × 10/12) = $7,117,000 (rounded).

i want to ask you where $77.95 come from in this solution.

Southeastern bell stocks a certain switch connector at its central warehouse for supplying field service offices. the yearly demand for these connectors is 15,000 units. southeastern estimates its annual holding cost for this item to be $25 per unit. the cost to place and process an order from the supplier is $75. the company operates 300 days per year, and the lead time to receive an order from the supplier is 2 working days. a) find the economic order quantity. b) find the annual holding costs. c) find the annual ordering costs. d) what is the reorder point?

4. suppose that pollution in a neighborhood comes from two factories, with marginal benefit curves given by mb1 = 12 – p1 and mb2 = 8 – p2. the level of pollution in the neighborhood is given by p = p1 + p2. the government wants to limit pollution by instituting a pollution-rights market. the government’s desired level of p is 10, so it prints 10 pollution rights and offers them for sale to the firms. a)find the equilibrium selling price of a pollution right, as well as the allocation of rights (and hence pollution levels) across the two factories. b)repeat part (a) for the case where the government’s desired level of pollution equals 14. c)comment on the usefulness of a pollution rights market in achieving efficient levels of pollution abatement.

Lo.2, 3, 9 lori, who is single, purchased 5-years class property for $200,00 and 7-years class property for $420,000 on may 20, 2018. lori experts the taxable income derived form the business (without regard to the amount expensed under ⧠179) to be about $550,000. lori has determined that she should elect immediate ⧠179 expensing in the amount of $520,000, but she doesn’t know which asset she should completely expense under ⧠179. she does not claim any available additional first-year depreciation. a. determine lori’s total cost recovery deduction if the ⧠179 expense is first taken with respect to the 5-year class asset. b. determine lori’s total cost recovery deduction if the ⧠179 expense is first taken with respect to the 7-year class asset. c. what is your advice for lori? d. assume that lori is in the 24% marginal tax bracket and that she uses ⧠179 on the 7-year asset. determine the present value of the tax savings from the depreciation deductions for both assets. see appendix g for present value factors, and assume a 6% discount rate. e. assume the same facts as in part (d), except that lori decides not to use ⧠179 on either asset. determine the present value of the tax savings under this choice. in addition, determine which option lori should choose. f. present your solution to parts (d) and (e) of the problem in a spreadsheet using appropriate microsoft excel formulas. e-mail your spreadsheet to your instructor with a two-paragraph summary of your findings.