Amazon has expanded its AWS services, with the following financial statements illustrating the results.

Income Statement for the Year Ended December 31, 2023:

• Sales revenue: $5,000,000
• Cost of goods sold: $3,000,000
• Gross margin: $2,000,000
• Operating expenses: $800,000
• Depreciation expense: $300,000
• Operating income: $900,000
• Non-operating items: $40,000
• Net income: $860,000

Balance Sheet as of December 31, 2023:

• Assets:
  • Cash: $250,000
  • Accounts receivable: $900,000
  • Merchandise inventory: $600,000
  • Equipment (less accumulated depreciation): $2,000,000
  • Total assets: $3,750,000
• Liabilities:
  • Accounts payable: $800,000
  • Notes payable: $1,000,000
  • Total liabilities: $1,800,000
  • Stockholders' equity: $1,950,000

Required:

1. Calculate the ROI for Amazon’s AWS expansion.
2. Amazon’s headquarters has $400,000 to invest, expecting a minimum ROI of 14%. Calculate the new ROI if the funds are invested at an ROI of 18%.
3. Assess the impact on the ROI if the funds are invested at an ROI of 10%.
4. Discuss the strategic advantages and risks of investing additional funds in AWS.