Exercise 16-14A (Algo) Determining the unadjusted rate of return LO 16-4

Adams Painting Company is considering whether to purchase a new spray paint machine that costs $3,400. The machine is expected to save labor, increasing net income by $340 per year. The effective life of the machine is 15 years according to the manufacturers estimate.

Required

1. Determine the unadjusted rate of return based on the average cost of the investment. (Enter your answer as a whole percentage (e.g. 0.55 should be entered as 55).)

Unadjusted rate of return = %