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 $5,200 per month. b. Remodeling and necessary equipment would cost $420,000. The equipment would have a 20-year life and a $21,000 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 $550,000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $95,000 per year for salaries, $6,000 per year for insurance, and $52,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 16.5% 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 20%, should he acquire the franchise? 3-a. Compute the payback period on the outlet. 3-b. If Mr. Swanson wants a payback of two years or less, will he acquire the franchise? Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. The Yogurt Place, Inc., Contribution Format Income Statement Sales 550,000 Variable expenses: Cost of ingredients 110,000 90,750 Commissions 200,750 Contribution margin 349,250 Fixed expenses: Salaries 95,000 6,000 Insurance 52,000 Utilities Rent 62,400 21,000 X Depreciation 236,400 112,850 %24 Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req A Req 3B Compute the simple rate of return promised by the outlet. (Round percentage answer to 1 decimal place.) Simple rate of return 26.9 X % Req 1 Req 2B Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req A Req 3B Compute the payback period on the outlet. (Round your answer to 1 decimal place.) Payback period 3.7 X years Req 2B Req 3B