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Orinoco borrowed $3m at 9% to finance construction of a factory on 1 May 20X7. Work on the project began on 1 June 20X7. $1m of the loan was not required to be spent until 1 September 20X7, so was reinvested until then at 7%.
What amount of borrowing costs should be capitalised for the year to 31 December 20X7?
A.$140,000
B.$156,667
C.$157,500
D.$180,000
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