Average Rate of Return

Lakeland Company is considering the purchase of equipment for $$155,000.$ The equipment will expand the Company's production and increase revenue by $$42,500$ per year. Annual cash operating expenses will increase by $$10,000.$ The equipment's useful life is $10$ years with no salvage value. Lakeland uses straight$-$line depreciation. The income tax rate is $35\%.$ What is the average rate of return on the investment?

Do not use negative signs with your answers.

$\backslash$table$[[$Increase in revenue,$$,],[$Increase in expenses,,$],[$Pretax income from investment,,$0],[$Income tax expense,,$0],[$Net income from investment,$$,0]]$

Round answer to the nearest whole percentage, if applicable.

Average rate of return on investment

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