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 6,700 units at $242.00 per unit. The equipment has a cost of $623,100, residual value of $46,900, 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		$40.00
	Direct materials		157.00
	Factory overhead (including depreciation)		27.50
		Total cost per unit	$224.50

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