Disney has introduced a new line of merchandise related to its latest animated movie. The first-year financial results are provided below.

Income Statement for the Year Ended December 31, 2023:

• Sales revenue: $3,000,000
• Cost of goods sold: $1,800,000
• Gross margin: $1,200,000
• Operating expenses: $500,000
• Depreciation expense: $150,000
• Operating income: $550,000
• Non-operating items: $30,000
• Net income: $520,000

Balance Sheet as of December 31, 2023:

• Assets:
  • Cash: $150,000
  • Accounts receivable: $500,000
  • Merchandise inventory: $400,000
  • Equipment (less accumulated depreciation): $1,000,000
  • Total assets: $2,050,000
• Liabilities:
  • Accounts payable: $400,000
  • Notes payable: $600,000
  • Total liabilities: $1,000,000
  • Stockholders' equity: $1,050,000

Required:

1. Calculate the ROI for Disney’s new merchandise.
2. Disney’s headquarters has $200,000 available for investment, seeking an ROI of 12%. Calculate the new ROI if the funds are invested at an ROI of 15%.
3. Evaluate the effect on ROI if the funds are invested at an ROI of 8%.
4. Discuss the strategic benefits and potential risks of investing additional funds in the new merchandise.