Assignment Task: Oahu 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 3,400 units at $256 per unit. The equipment has a cost of $316,200, residual value of $23,800, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows:
Line Item Description Amount
Cost per unit:
Direct labor $44.00
Direct materials 170.00
Factory overhead (including depreciation) 29.00
Total cost per unit $243.00
Determine the average rate of return on the equipment. If required, round to the nearest whole percent.