Problem 7-19 (Algo) Simple Rate of Return; Payback Period [LO7-1, LO7-6] Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place. Incorporated, to dispense frozen yogurt products under The Yogun Place name. Mr. Swanson has assembled the following information relating to the franchise: a. A sultable location in a large shopping mall can be rented for $3,100 per month. b. Remodeling and necessary equipment would cost $294,000 The equipment would have a 20 -year life and a $14,700 salvage value. Straight-line depreclation 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 $340.000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $74,000 per year for salaries, $3,900 per year for insurance, and $31,000 per year for utilities, In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of 14.5% 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 outiet. 3-b. If Mr. Swanson wants a payback of three years or less, will he acquire the franchse? Complete this question by entering your answers in the tabs below. Prepare a contribution format income statement that shows the expected net operating income fach year from the franchise outlet