Average Rate of Return-Cost Savings Sager Industries is considering an investment in equipment that will replace direct labor. The equipment has a cost of $141,000 with a $12,000 residual value and a five-year life. The equipment will replace three employees who has an average total wages of $44,060 per year. In addition, the equipment will have operating and energy costs of $13,670 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment