Clarion Realty Has Decided to Construct Its Own Office Building

Clarion Realty has decided to construct its own office building.The construction will be partially financed through a construction loan and any remainder will be financed from internally generated funds.The internal accountants have collected the following information concerning the construction.
$\begin{array}{llll}& \text { Average Balance } & \text { Construction } & \text { Other } \\\text { Year } & \text { Construction Account } & \text { Debt } @ 6 \% & \text { Debt }(10 \%\\1 & \$ 2,000,000 & \$ 1,000,000 & \$ 500,000 \\2 & \$ 4,000,000 & \$ 1,000,000 & \$ 250,000 \\3 & \$ 3,000,000 & \$ 800,000 & \$ 200,000\end{array}$ The amount, if any, of capitalized interest cost for Year 2 is

A) $0
B) $50,000
C) $60,000
D) $180,000
E) $230,000