Problem
Master Fab Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $131,000 with a $11,000 residual value and a 10-year one employee who has an average wage of $29,010 per year. In addition, the equipment wi have operating and energy costs of $6,360 per equipment will replace fe. The year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.