Micro Tek Inc. is considering an investment in new equipment that will be used to...
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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 6,500 units at $298 per unit. The equipment has a cost of $725,400, residual value of $54,600, 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 | $50.00 | ||
| Direct materials | 193.00 | ||
| Factory overhead (including depreciation) | 33.40 | ||
| Total cost per unit | $276.40 | ||
Determine the average rate of return on the equipment. If required, round to the nearest whole percent. fill in the blank 1 %
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