Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Incorporated, to dispense frozen yogurt products under The Yogurt Place name. Mr. Swanson has assembled the following information relating to the franchise: a. A suitable location in a large shopping mall can be rented for $3,200 per month b. Remodeing and necessary equipment would cost $300,000. The equipment would have a 20 -year life and a $15,000 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation c. Based on similar outlets elsewhere. Mr. Swanson estimates that sales would total $350,000 per yeat. Ingredients would cost 20% of sales d. Operating costs would include $75,000 per year for salaries, $4,000 per year for insurance, and $32.000 per year for utilities. In addition. Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of 15.0% of sales. Required: 1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. 2-a. Compute the simple rate of return promised by the outlet. 2-b. If Mc. Swanson requires a simple rate of return of at least 19%, should he acquire the franchise? 3-a. Compute the payback period on the outlet. 3-b. If Mr Swanson wants a payback of three years or less, will he acquire the franchise? Complete this question by entering your answers in the tabs below. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. Compute the simple rate of return promised by the outlet. Note: Round your answer to 1 decimal place. Complete this question by entering your answers in the tabs below. Compute the payback period on the outlet. Note: Round your answer to 1 decimal place..

1. Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Incorporated, to
dispense frozen yogurt products under The Yogurt Place name. Mr. Swanson has assembled the
following information relating to the franchise: a. A suitable location in a large shopping mall
can be rented for $3,200 per month b. Remodeing and necessary equipment would cost
$300,000. The equipment would have a 20 -year life and a $15,000 salvage value. Straight-line
depreciation would be used, and the salvage value would be considered in computing
depreciation c. Based on similar outlets elsewhere. Mr. Swanson estimates that sales would total
$350,000 per yeat. Ingredients would cost 20% of sales d. Operating costs would include
$75,000 per year for salaries, $4,000 per year for insurance, and $32.000 per year for utilities. In
addition. Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of
15.0% of sales. Required: 1. Prepare a contribution format income statement that shows the
expected net operating income each year from the franchise outlet. 2-a. Compute the simple rate
of return promised by the outlet. 2-b. If Mc. Swanson requires a simple rate of return of at least
19%, should he acquire the franchise? 3-a. Compute the payback period on the outlet. 3-b. If Mr
Swanson wants a payback of three years or less, will he acquire the franchise? Complete this
question by entering your answers in the tabs below.
Prepare a contribution format income statement that shows the expected net operating income
each year from the franchise outlet.
Compute the simple rate of return promised by the outlet. Note: Round your answer to 1 decimal
place.
Complete this question by entering your answers in the tabs below. Compute the payback period
on the outlet. Note: Round your answer to 1 decimal place.