Differential Analysis Involving Opportunity Costs On July 1, Coastal Distribution Company is considering leasing a building...

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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 $150,000 of 6% U.S. Treasury bonds that mature in 16 years. The bonds could be purchased at face value. The following data have been assembled: Cost of store equipment Life of store equipment $150,000 16 years Estimated residual value of store equipment $17,500 Yearly costs to operate the warehouse, excluding depreciation of equipment $55,800 Yearly expected revenues-years 1-8 75,800 69,800 Yearly expected revenues-years 9-16 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 "0". 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 Warehouse Invest in Bonds Differential Effects Revenues (Alternative 1) (Alternative 2) (Alternative 2) 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 $150,000 of 6% U.S. Treasury bonds that mature in 16 years. The bonds could be purchased at face value. The following data have been assembled: Cost of store equipment Life of store equipment $150,000 16 years Estimated residual value of store equipment $17,500 Yearly costs to operate the warehouse, excluding depreciation of equipment $55,800 Yearly expected revenues-years 1-8 75,800 69,800 Yearly expected revenues-years 9-16 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 "0". 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 Warehouse Invest in Bonds Differential Effects Revenues (Alternative 1) (Alternative 2) (Alternative 2)