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 $3,000 per month. b. Remodeling and necessary equipment would cost $288,000. The equipment would have a 15-year life and a $19,200 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 $330,000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $73,000 per year for salaries, $3,800 per year for insurance, and $30,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 14.0% 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 17%, 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? X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Req Req 3B 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 $ 330,000 Variable expenses: Cost of ingredients 66,000 Commissions 46,200 112,200 Contribution margin 217,800 Fixed expenses: Salaries Depreciation Insurance OOOOOO 73,000 17,920 3,800 33,000 X 36,000 Utilities Rent 163,720 Net operating income 54,080 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3A Req 3B Compute the simple rate of return promised by the outlet. (Round your answer to 1 decimal place.) Simple rate of return 18.8 % X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Reg 2B Req Reg 3B If Mr. Swanson requires a simple rate of return of at least 17%, should he acquire the franchise? Yes No Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req Reg 3B Compute the payback period on the outlet. (Round your answer to 1 decimal place.) Payback period 4.0 x years