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ans of the ques quickly Joe Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc. to dispense frozen yogurt prou The

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ans of the ques quickly

Joe Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc. to dispense frozen yogurt prou The Yogurt Place Swanson has assembled the following information relating to the franchise 55:26 a. A suitable location in a large shopping mall can be rented for $3,760 per month. b. Remodelling and necessary equipment would cost $292,000. The equipment would have a 15-year life and an $17,500 salvage value. Straight-line depreciation would be used. c. On the basis of similar outlets elsewhere, Swanson estimated that sales would total $524,000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $206,000 per year for salaries, $6,400 per year for insurance, and $34,800 per year for utilities. In addition, Swanson would have to pay a commission to The Yogurt Place of 12.5% of sales. k Required: 1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet JOE SWANSON Income Statement Deduct Operating expenses Total operating expenses 2-a. Compute the simple rate of return promised by the outlet. (Round your answer to 2 decima considered as 12.34%). Simple rate of return 55:09 OK 2-b. If Swanson requires a simple rate of return of at least 13.0%, should he acquire the franchise? O Yes O No 3-a. Compute the payback period on the outlet. (Round your answer to 1 decimal place.) Payback period years 3-b. f Swanson wants a payback of four years or less, will he acquire the franchise? Yes No

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