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Differential Analysis Involving Opportunity Costs On October 1, Matrix Stores Inc

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Differential Analysis Involving Opportunity Costs On October 1, Matrix 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 $150,100 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 $150,100 Life of store equipment 16 years Estimated residual value of store equipment $17,200 Yearly costs to operate the store, excluding depreciation of store equipment $56,800 Yearly expected revenues—years 1-8 $74,900 Yearly expected revenues—years 9-16 $70,900 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 Retail Store (Alternative 1) Invest in Bonds (Alternative 2) Differential Effect on Income (Alternative 2) Revenues $fill in the blank 2ca3c2fe8033fdd_1 $fill in the blank 2ca3c2fe8033fdd_2 $fill in the blank 2ca3c2fe8033fdd_3 Costs: Costs to operate store fill in the blank 2ca3c2fe8033fdd_4 fill in the blank 2ca3c2fe8033fdd_5 fill in the blank 2ca3c2fe8033fdd_6 Cost of equipment less residual value fill in the blank 2ca3c2fe8033fdd_7 fill in the blank 2ca3c2fe8033fdd_8 fill in the blank 2ca3c2fe8033fdd_9 Income (Loss) $fill in the blank 2ca3c2fe8033fdd_10 $fill in the blank 2ca3c2fe8033fdd_11 $fill in the blank 2ca3c2fe8033fdd_12 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? $fill in the blank eeb9a5fea074f83_2