under ine yogurt Hiace name. Mr. Swanson nas assembied the following intormation relating to the francnise: 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 salaties, $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, Incorporated, 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 teturn of at least 20%, should he acquire the franchise? 3-a. Compute the payback period on the outlet. 3-b. If Mr. Swanson wanls a payback of two years of less, will he acquire the franchise? Compute the simple rate of return promised by the outlet. (Round your answer to 1 decimal place.) If Mr. Swanson requires a simple rate of return of at least 20%, should he acquire the franchise? Yes Compute the payback period on the outlet. (Round your answer to 1 decimal place.) If Mr. Swanson wants a payback of two years or less, will he acquire the franchise? Yes