Average Rate of Retum-Cost Savings Sager Industries is considering an investment in equipment that will replace direct labor. The equipment has a cost of $111,000 with a $10,000 residual value and a 10- year life. The equipment will replace three employees who has an average total wages of $26,340 per year. In addition, the equipment will have operating and energy costs of $5,350 per year Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.