Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Incorporated, to dispense frozen yogurt pr

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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:
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
23%, 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?