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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
Average rate of returnnew 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 units at $ per unit. The equipment has a cost of $ residual value of $ and an year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows:
Line Item Description Amount
Cost per unit:
Direct labor $
Direct materials
Factory overhead including depreciation
Total cost per unit $
Determine the average rate of return on the equipment. If required, round to the nearest whole percent.
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