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On July 1, Midway Distribution Company is considering leasing a building and buying the necessary equipment...

On July 1, Midway 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 $148,700 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 $148,700

Life of store equipment 16 years

Estimated residual value of store equipment $17,000

Yearly costs to operate the warehouse, excluding depreciation of equipment

depreciation of store equipment $55,700

Yearly expected revenues—years 1-8 74,500

Yearly expected revenues—years 9-16 70,100

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ekkarill92 answered 2 years ago
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