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 6,000 units at $284.00 per unit. The equipment has a cost of $669,600, residual value of $50,400, 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 |
$47.00 |
| Direct materials |
184.00 |
| Factory overhead (including depreciation) |
32.00 |
|
Total cost per unit |
$263.00 |
Determine the average rate of return on the equipment. If required, round to the nearest whole percent.