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 4,800 units at $259 per unit. The equipment has a cost of $446,400, residual value of $33,600, 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		$45.00
	Direct materials		175.00
	Factory overhead (including depreciation)		30.00
		Total cost per unit	$250.00

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

Average Rate of Return-New 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 4,800 units at $259 per unit. The equipment has a cost of $446,400, residual value of $33,600, 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 $45.00 Direct materials 175.00 Factory overhead (including depreciation) 30.00 Total cost per unit $250.00 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. %