On October 1, Midway Distribution Company 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 $151,900 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:

Differential Analysis Involving Opportunity Costs On October 1, Midway Distribution Company 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 $151,900 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 $151,900 Life of store equipment 16 years Estimated residual value of store equipment $17,000 Yearly costs to operate the store, excluding depreciation of store equipment $56,300 Yearly expected revenues-years 1-8 $75,100 Yearly expected revenues-years 9-16 $70,100 Required: 1. Prepare a differential analysis as of October 1 presenting the proposed operation of the store for the 16 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). If an amount is zero, enter zero "0". Differential Analysis Operate Retail Store (Alt. 1) or Invest in Bonds (Alt. 2) October 1 Operate Invest Differential Retail Store in Bonds Effect on Income (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: Costs to operate store Cost of equipment less residual value L Income (Loss) $17,000 Estimated residual value of store equipment Yearly costs to operate the store, excluding depreciation of store equipment Yearly expected revenues-years 1-8 $56,300 $75,100 $70,100 Yearly expected revenues-years 9-16 Required: 1. Prepare a differential analysis as of October 1 presenting the proposed operation of the store for the 16 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). If an amount is zero, enter zero "0". Differential Analysis Operate Retail Store (Alt. 1) or Invest in Bonds (Alt. 2) October 1 Operate Invest Differential Retail Store in Bonds Effect on Income (Alternative 1) (Alternative 2) (Alternative 2) Revenues S Costs: Costs to operate store Cost of equipment less residual value Income (Loss) 2. Based on the results disclosed by the differential analysis, should the proposal to operate a retail store be accepted? 3. If the proposal is accepted, what would be the total estimated income from operations of the store for the 16 years