Obj. 1 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 $740,000 of 5% U.S. Treasury bonds that mature in 14 years. The bonds could be purchased at face value. The following data have been assembled: $740,000 14 years Cost of equipment Life of equipment Estimated residual value of equipment Yearly costs to operate the warehouse, excluding depreciation of equipment Yearly expected revenuesyears 1-7 Yearly expected revenuesyears 814 $75,000 $175,000 $280,000 $240,000 Question 1 (10 points) Question 1 options: Alternative 2 is to invest in 14-year bonds. The net impact to income from this alternative is $ . Identify the impact to income as an INCREASE (positive amount) or DECREASE (negative amount). Write the term INCREASE or DECREASE in blank provided. Question 2 (10 points) Question 2 options: Alternative 1 is operating the warehouse. Total costs to operate the warehouse over the 14 year period = $. Question 3 (10 points) Question 3 options: Alternative 1 is operating the warehouse. Estimated revenues over the 14 year period are $ Question 4 (10 points) Question 4 options: Alternative 2 is investing in bonds. Revenue estimated each year $ Total revenue for the 14 year period = $ Question 5 (10 points) Alternative 1 is to operate the warehouse over the 14 year period. The net impact to income from this alternative is $ Identify the impact to income as an INCREASE (positive amount) or DECREASE (negative amount). Write the term INCREASE or DECREASE in blank provided. Question 6 (10 points) Question 6 options: Alternative 1 is operating the warehouse. The cost of the equipment less its residual value = $ Question 7 (10 points) The proposal to operate the warehouse should be accepted because the net impact to income is greater for this alternative than the bond investment alternative. True False Question 8 (10 points) The operating costs of alternative 1 (operating the warehouse) are greater than the operating costs of alternative 2 (investing in bonds). True False Question 9 (10 points) Alternative 2 is to invest in bonds. The costs over the 14 year period $740,000. True False Question 10 (10 points) The differential effect on income generated by revenue from alternative 2 (investing in bonds) over alternative 1 (operating the warehouse) is a positive impact of over $3 million. True False