. During the construction period, Vania has the following debt obligations outstanding
Total cost amounted to $5,200,000, and the weighted average of accumulated expenditures was $3,500,000.Jane Esplanade, the president of the company, has been shown the costs associated with this construction project and capitalized on the balance sheet. She is bothered by the avoidable interest included in the cost. She argues that, first, all the interest is unavoidableno one lends money without expecting to be compensated for it. Second, why cant the company use all the interest on all the loans when computing this avoidable interest? Finally, why cant her company capitalize all the annual interest that accrued over the period of construction?Instructions(Round the weighted-average interest rate to two decimal places.)You are the manager of accounting for the company. In a memo, explain what avoidable interest is, how you computed it (being especially careful to explain why you used the interest rates that you did), and why the company cannot capitalize all its interest for the year. Attach a schedule supporting any computations that you use.