Nike has launched a new line of sports apparel. The financial performance for the first year is as follows.

Income Statement for the Year Ended December 31, 2023:

• Sales revenue: $2,500,000
• Cost of goods sold: $1,500,000
• Gross margin: $1,000,000
• Operating expenses: $400,000
• Depreciation expense: $100,000
• Operating income: $500,000
• Non-operating items: $20,000
• Net income: $480,000

Balance Sheet as of December 31, 2023:

• Assets:
  • Cash: $100,000
  • Accounts receivable: $300,000
  • Merchandise inventory: $200,000
  • Equipment (less accumulated depreciation): $400,000
  • Total assets: $1,000,000
• Liabilities:
  • Accounts payable: $200,000
  • Notes payable: $300,000
  • Total liabilities: $500,000
  • Stockholders' equity: $500,000

Required:

1. Calculate the ROI for Nike’s new sports apparel line.
2. Nike’s headquarters has $150,000 available for investment, expecting an ROI of 14%. Calculate the new ROI if the funds are invested at an ROI of 18%.
3. Determine the effect on ROI if the funds are invested at an ROI of 10%.
4. Evaluate the strategic benefits and potential risks of investing additional funds in the sports apparel line.