Chapter 13: Paul Swanson has an opportunity to acquire a franchise from the Yogurt Place Inc. to dispense frozen yogurt products under the Yogurt Place name.

Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., 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 $4,400 per month. b. Remodeling and necessary equipment would cost $372,000. The equipment would have a 10-year life and an $37,200 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 $470,000 per year. Ingredients would cost of sales. $44,000 d. costs would include $87,000 per year for salaries, $5,200 per year for insurance, and per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 12.5% of sales