a. On July 1, Matrix Stores Inc. 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 $148,800 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		$148,800
Life of store equipment		16 years
Estimated residual value of store equipment		$18,400
Yearly costs to operate the warehouse, excluding depreciation of equipment
	depreciation of store equipment	$56,100
Yearly expected revenuesyears 1-8		74,100
Yearly expected revenuesyears 9-16		71,000

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". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis Operate Warehouse (Alt. 1) or Invest in Bonds (Alt. 2) July 1

	Operate Warehouse (Alternative 1)	Invest in Bonds (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$fill in the blank ee9141ff5075fc1_1	$fill in the blank ee9141ff5075fc1_2	$fill in the blank ee9141ff5075fc1_3
Costs:
Costs to operate warehouse	fill in the blank ee9141ff5075fc1_4	fill in the blank ee9141ff5075fc1_5	fill in the blank ee9141ff5075fc1_6
Cost of equipment less residual value	fill in the blank ee9141ff5075fc1_7	fill in the blank ee9141ff5075fc1_8	fill in the blank ee9141ff5075fc1_9
Income (Loss)	$fill in the blank ee9141ff5075fc1_10	$fill in the blank ee9141ff5075fc1_11	$fill in the blank ee9141ff5075fc1_12

If the proposal is accepted, what is the total estimated income from operations of the warehouse for the 16 years?

b.

The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton. Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminum will require additional processing costs of $620 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum (due to trim losses).

Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum (Alternative 2). Use a minus sign to indicate subtracted amounts, negative amounts, or a loss.

Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2) February 5

	Sell Ingot (Alternative 1)	Process Further into Rolled Aluminum (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues, per batch	$fill in the blank cb3c5af49f8bfa5_1	$fill in the blank cb3c5af49f8bfa5_2	$fill in the blank cb3c5af49f8bfa5_3
Costs, per batch	fill in the blank cb3c5af49f8bfa5_4	fill in the blank cb3c5af49f8bfa5_5	fill in the blank cb3c5af49f8bfa5_6
Income (loss), per batch	$fill in the blank cb3c5af49f8bfa5_7	$fill in the blank cb3c5af49f8bfa5_8	$fill in the blank cb3c5af49f8bfa5_9