Samsung has developed a new line of smart home devices. The financial results for the first year are as follows.

Income Statement for the Year Ended December 31, 2023:

• Sales revenue: $2,800,000
• Cost of goods sold: $1,700,000
• Gross margin: $1,100,000
• Operating expenses: $500,000
• 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: $400,000
  • Merchandise inventory: $300,000
  • Equipment (less accumulated depreciation): $600,000
  • Total assets: $1,400,000
• Liabilities:
  • Accounts payable: $300,000
  • Notes payable: $400,000
  • Total liabilities: $700,000
  • Stockholders' equity: $700,000

Required:

1. Calculate the ROI for Samsung’s new smart home devices.
2. Samsung’s headquarters has $150,000 available, targeting an ROI of 10%. Calculate the new ROI if the funds are invested at an ROI of 12%.
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 smart home devices.