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 5,400
units at $263.00 per unit. The equipment has a cost of $452,000,
residual value of $34,000, 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 $46.00
Direct materials 177.00 Factory overhead (including depreciation)
30.10 Total cost per unit $253.10 Determine the average rate of
return on the equipment. If required, round to the nearest whole
percent. %

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