PR 24-1B Differential analysis involving opportunity costs Obj. 1 3. $525,000 On July 1, Coastal Distribution Company is considering leasing a building and buying the neces sary 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: Cost of equipment Life of equipment Estimated residual value of equipment Yearly costs to operate the warehouse, excluding $740,000 14 years $75,000 EXCEL TEMPLATE depreciation of equipment Yearly expected revenues-years 1-7 Yearly expected revenues-years 8-14 $175,000 $280,000 $240,000 Instructions 1. Prepare a differential analysis as of July 1 presenting the proposed operation of the ware house for the 14 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). accepted? house for the 14 years? 2. Based on the results disclosed by the differential analysis, should the proposal be 3. If the proposal is accepted, what is the total estimated income from operations of the ware