Coca-Cola has diversified into a new product line of energy drinks. The financial statements for the first year are provided below.

Income Statement for the Year Ended December 31, 2023:

• Sales revenue: $1,200,000
• Cost of goods sold: $700,000
• Gross margin: $500,000
• Operating expenses: $200,000
• Depreciation expense: $50,000
• Operating income: $250,000
• Non-operating items: $30,000
• Net income: $220,000

Balance Sheet as of December 31, 2023:

• Assets:
  • Cash: $100,000
  • Accounts receivable: $150,000
  • Merchandise inventory: $100,000
  • Equipment (less accumulated depreciation): $250,000
  • Total assets: $600,000
• Liabilities:
  • Accounts payable: $100,000
  • Notes payable: $150,000
  • Total liabilities: $250,000
  • Stockholders' equity: $350,000

Required:

1. Calculate the ROI for Coca-Cola’s new energy drink line.
2. Coca-Cola’s headquarters has $100,000 to invest in new ventures, seeking an ROI of 12%. Calculate the new ROI if the investment achieves an ROI of 15%.
3. Determine the effect on ROI if the funds are invested at an ROI of 8%.
4. Evaluate the strategic benefits and risks of investing additional funds in the energy drink line.