A piece of labor-saving equipment has just come onto the market that Mitsui Electronics could use to reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow: Purchase cost of the equipment: $500,000

Sales value at the end of life of 10 years: $ 100, 000

Annual incremental cash flow: $90,000

Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life.