Average Rate of Return Lakeland Company is considering the purchase of equipment for $175,000. The equipment will expand the Company's production and increase revenue by $40,000 per year. Annual cash operating expenses will increase by $12,000. The equipment's useful life is 10 years with no salvage value. Lakeland uses straight-line depreciation. The income tax rate is 25%. What is the average rate of return on the investment? Do not use negative signs with your answers. Increase in revenue $ 40,000 Increase in expenses 12,000 x Pretax income from investment 10,500 Income tax expense 2,625 Net income from investment $ 7,875 Round answer to the nearest whole percentage, if applicable. Average rate of return on investment 4 * %