Average rate of return$-$new product

Oahu Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of $40,000$ units at $$80$ per unit. The equipment has a cost of $$7,400,000,$ residual value of $$600,000,$ and an $8-$year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows:

Cost per unit:

Direct labor

Direct materials

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