Average Rate of ReturnNew Product

Hana 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 6,300 units at $315 per unit. The equipment has a cost of $527,300, residual value of $39,700, 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		$54.00
	Direct materials		210.00
	Factory overhead (including depreciation)		36.15
		Total cost per unit	$300.15

Determine the average rate of return on the equipment. If required, round to the nearest whole percent. fill in the blank 1 %