Lakeland Company is considering the purchase of equipment for $175,000. The equipment will expand the Company's production and increase revenue by $40,000 per year. Annual cash operating expenses will increase by $12,000. The equipment's useful life is 10 years with no salvage value. Lakeland uses straight-line depreciation. The income tax rate is 25%. What is the average rate of return on the investment?

Do not use negative signs.

1.

Increase in revenue	Answer
Increase in expenses	Answer
Pretax income from investment	Answer
Income tax expense	Answer
Net income from investment	Answer

2. Round answer to the nearest whole percentage, if applicable.

Average rate of return on investment