Pocket Pilot Inc. is considering an investment in new equipment that will be used to manufacture a mobile communications device. The device is expected to generate additional annual sales of 6,000 units at $280 per unit. The equipment has a cost of $640,000, residual value of $50,000, and an 8-year life. The equipment can only be used to manufacture the device. The cost to manufacture the device is shown below.
Cost per unit:

Direct labor $ 45.00
Direct materials 180.00
Factory overhead (including depreciation) 32.00
Total cost per unit $257.00

Determine the average rate of return on the equipment.