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Hello sir!
Do we need to time-apportion interest rates when determining Capitalisation Rate?
I regard it to be so although information is usually not provided to achieve that.Hi,
You will always be given the annual rate of interest in the question. If we are going to capitalise the borrowing costs for half of the year then we pro-rate the total interest for the year by 6/12. It doesn’t get more complicated than simple pro-rating of the total annual interest.
Thanks
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