.

Average Rate of ReturnNew Product

Pocket Pilot Inc. is considering an investment in new equipment that will be used to manufacture a mobile communications device. The device is expected to generate additional annual sales of 4,100 units at $319 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 device. The cost to manufacture the device is shown below.

Cost per unit:
	Direct labor		$54
	Direct materials		209
	Factory overhead (including depreciation)		35.6
		Total cost per unit	$298.6

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