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 $3,500 per month b. Remodeling and necessary equipment would cost $270,000. The equipment would have a 15-year life and an $18,000 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 $300,000 per year. Ingredients would cost 20% of d. Operating costs would include $70,000 per year for salaries, $3,500 per year for insurance, and $27,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of 12.5% of sales. 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 26. If Mr Swanson requires a simple rate of return of at least 12%, should he acquire the franchise? 3-a. Compute the payback period on the outlet 3-6. Mr. Swanson wants a payback of four years or less, will be acquire the franchise? Complete this question by entering your answers in the tabs below. Reg 1 Red 2A Reg 28 Reg 3 Reg 38 Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. The Yogurt Place, incorporated Contribution Format Income Statement Variable expenses 0 0 Fbed expenses 0 0 1. Prepare a contribution format income statement that shows the expected net operating income each yearf 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 12%, should he acquire the franchise? 3-a. Compute the payback period on the outlet 3-5. If Mr. Swanson wants a payback of four years or less, will he acquire the franchise? Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Req Req 3B Compute the simple rate of return promised by the outlet. (Round your final answer to the nearest whole percent.) Simple rate of retum % expected net operating inc 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 12%, should he acquire the franc 3-a. Compute the payback period on the outlet. 3-b. If Mr. Swanson wants a payback of four years or less, will he acquire the franchise? Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Req 3A Req 3B If Mr. Swanson requires a simple rate of return of at least 12%, should he acquire the franchise? OYes ONO 12%, should he 3-a. Compute the payback period on the outlet. 3-b. If Mr. Swanson wants a payback of four years or less, will he acquire the fi Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Reg 2B Req 3A Req 3B Compute the payback period on the outlet. (Round your answer to 1 decimal place Payback period years 1. Prepare a contribution format income statement that shows the expected net operating income 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 12%, should he acquire the franchise 3-a. Compute the payback period on the outlet. 3-b. If Mr. Swanson wants a payback of four years or less, will he acquire the franchise? Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Reg 2B Req 3A Reg 38 If Mr. Swanson wants a payback of four years or less, will he acquire the franchise? Yes ONO
