question

Average Rate of Return-New Product Micro Tek 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 6,100 units at $298 per unit. The equipment has a cost of $680,800, residual value of $51,200, and an eight-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor $49.00 Direct materials 190.00 Factory overhead (including depreciation) 32.00 Total cost per unit $271.00 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. % Average Rate of Return The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $84,000 $80,000 Useful life 4 years 5 years Estimated residual value 0 0 Estimated total income over the useful life $9,240 $21,000 Determine the expected average rate of return for each proposal. If required, round your answers to one decimal place. 3D Printer % Truck %