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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

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 4,100 units at $227 per unit. The equipment has a cost of $381,300, residual value of $28,700, 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 $37.00
Direct materials 145.00
Factory overhead (including depreciation) 25.00
Total cost per unit $207.00

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

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