Average Rate of ReturnNew Product

Galactic 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 4,100 units at $185 per unit. The equipment has a cost of $457,600, residual value of $34,400, and an eight-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows:

Cost per unit:
	Direct labor		$31.00
	Direct materials		122.00
	Factory overhead (including depreciation)		20.60
		Total cost per unit	$173.60

Determine the average rate of return on the equipment. If required, round to the nearest whole percent. %