Differential Analysis involving Opportunity Costs On July 1, Coastal Distribution Company is considering leasing a building and buying the necessary equipment to operate a public warehouse. Alternatively, the company could use the funds to invest in $150,300 of 6% U.S. Treasury bonds that mature in 16 years. The bonds could be purchase at face value. The following data have been assembled: Cost of store equipment $150,300 Life of store equipment 16 years $18,100 Estimated residual value of store equipment Yearly costs to operate the warehouse, excluding depreciation of equipment Yearly expected revenues--years 1-8 Yearly expected revenues--years 9-16 $56,700 75,200 69,200 Required: 1. Prepare a differential analysis as of July 1 presenting the proposed operation of the warehouse for the 16 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). If an amount is zero, enter "o". If required, use a minus sign to indicate a loss. Differential Analysis Operate Warehouse (Alt. 1) or Invest in Bonds (Alt. 2) July 1 Operate Invest in Differential Warehouse Bonds Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: Costs to operate warehouse Costs: Costs to operate warehouse Cost of equipment less residual value Profit (Loss) Feedback Check My Work 1. Subtract the warehouse costs (14 years) and the cost of the equipment less the residual value from the warehouse. Determine the bond investment interest income for 14 years (principal x rate x time). Determi of the revenues, costs, and profit (loss) by subtracting alternative 1 from alternative 2. Which alternative ha income? 2. Based on the results disclosed by the differential analysis, should the proposal be accepted? 3. If the proposal is accepted, what is the total estimated operating income of the warehouse for 16 years? Feedback Check My Wor 2. Subtract the warehouse costs (14 years) and the cost of the equipment less the residual value from the re