Example 3: Zenzi Co had the following loans in place at beginning and end of 20X8

1 January

31 December

20X8

20X8

$m

$m

10.0% Bank loan repayable 20Y3

120

120

9.5% Bank loan repayable 20Y1

 80

80

8.9% debenture repayable 20Y8

-

150

1 January31 December

20X820X8 $m$m

10.0% Bank loan repayable 20Y3120120

9.5% Bank loan repayable 20Y18080

8.9% debenture repayable 20Y8-150

The 8.9% debenture was issued to fund the construction of a qualifying asset (a piece of mining equipment)，construction of which began on 1 July 20X8.

On 1 January 20X8, Zenzi Co began construction of a qualifying asset, a piece of machinery for a hydroelectric plant, using existing borrowings. Expenditure drawn down for the construction was: $30m on 1 January 20X8, $20m on 1 October 20X8.

Required

Calculate the borrowing costs to be capitalized for the hydro-electric plant machine