Microsoft has expanded its Azure services, and the financial statements below provide insight into the performance of this expansion.

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: $100,000
• Operating income: $600,000
• Non-operating items: $20,000
• Net income: $580,000

Balance Sheet as of December 31, 2023:

• Assets:
  • Cash: $200,000
  • Accounts receivable: $600,000
  • Merchandise inventory: $400,000
  • Equipment (less accumulated depreciation): $1,000,000
  • Total assets: $2,200,000
• Liabilities:
  • Accounts payable: $500,000
  • Notes payable: $400,000
  • Total liabilities: $900,000
  • Stockholders' equity: $1,300,000

Required:

1. Calculate the ROI for Microsoft’s Azure expansion.
2. Microsoft’s headquarters has $300,000 to allocate, aiming for a 12% ROI. 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. Analyze the potential strategic benefits and risks of investing additional funds in Azure.