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Differential Analysis Involving Opportunity Costs On October 1, White Way Stores Inc. is considering leasing a building and purchasing the necessary equipment to operate a
Differential Analysis Involving Opportunity Costs On October 1, White Way Stores Inc. is considering leasing a building and purchasing the necessary equipment to operate a retail store. Alternatively, the company could use the funds to invest in $180,000 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 Estimated residual value of store equipment $180,000 16 years $15,000 Yearly costs to operate the store, excluding depreciation of store equipment $58,000 Yearly expected revenues-years 1-8 $85,000 Yearly expected revenues-years 9-16 $73,000 Required: 1. Prepare a differential analysis as of October 1 to determine whether to Operate Retail Store (Alternative 1) or Invest in Bonds (Alternative 2). If an amount is zero, enter zero "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign
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