Refer to this chapter’s opening feature about The Chocolate Farm. Assume the Macmillans decide to open a small retail store to supplement their chocolate operations.

Required

1. The Macmillans obtain a \($50,000\) bank loan and contribute \($30,000\) of their own assets to sup¬ port the opening of the new store.

a. What is the new store’s total amount of liabilities plus equity?

b. What is the new store’s total amount of assets?
2. If the Macmillans earn \($20,000\) of income in the first year the retail store operates, compute the store’s return on assets (assume average assets equal \($80,000).\) Assess its performance if competitors average a 10% return.