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 $3,900 per month. b. Remodeling and necessary equipment would cost $342,000. The equipment would have a 15-year life and a $22,800 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 $420,000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $82,000 per year for salaries, $4,700 per year for insurance, and $39,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of 13.5% 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 Mr. Swanson requires a simple rate of return of at least 18 %, 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? Req 1 Req 2A Req 28 Req 3A Req 3B Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. Variable expenses: Fixed expenses: The Yogurt Place, Incorporated, Contribution Format Income Statement 0 0 0 Reg 1 Req 2A > Ichise: a. A suitable location in a large shopping mall can be rented for $3,900 per month. b. Remodeling and necessary equipment would cost $342,000. The equipment would have a 15-year life and a $22,800 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 $420,000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $82,000 per year for salaries, $4,700 per year for insurance, and $39,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to TherYogurt Place, Incorporated, of 13.5% 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 Mr. Swanson requires a simple rate of return of at least 18 %, 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. Req 1 Req 2A Req 28 Req 3A Req 38 Compute the simple rate of return promised by the outlet. (Round your answer to 1 decimal place.) Simple rate of return % a. A suitable location in a large shopping mall can be rented for $3,900 per month. b. Remodeling and necessary equipment would cost $342,000. The equipment would have a 15-year life and a $22,800 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 $420,000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $82,000 per year for salaries, $4,700 per year for insurance, and $39,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of 13.5% 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 Mr. Swanson requires a simple rate of return of at least 18 %, 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. Req 1 Req 2A Req 28 Req 3A Req 38 Compute the payback period on the outlet. (Round your answer to 1 decimal place.) Payback period years