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 $149,800 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		$149,800
Life of store equipment		16 years
Estimated residual value of store equipment		$17,000
Yearly costs to operate the warehouse, excluding depreciation of equipment		$55,900
Yearly expected revenuesyears 1-8		74,200
Yearly expected revenuesyears 9-16		70,200

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 "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 (Alternative 1)	Invest in Bonds (Alternative 2)	Differential Effects (Alternative 2)
Revenues	$fill in the blank	$fill in the blank	$fill in the blank
Costs:
Costs to operate warehouse	fill in the blank	fill in the blank	fill in the blank
Cost of equipment less residual value	fill in the blank	fill in the blank	fill in the blank
Profit (Loss)	$fill in the blank	$fill in the blank	$fill in the blank

2. Based on the results disclosed by the differential analysis, should the proposal be accepted?

Yes No

3. If the proposal is accepted, what is the total estimated operating income of the warehouse for 16 years? $fill in the blank