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Average Rate of Return-New Product Micro Tek Inc. is considering an investment in new equipment...

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Accounting

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Average Rate of Return-New Product 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 3,400 units at $232 per unit. The equipment has a cost of $284,600, residual value of $21,400, 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 Direct materials Factory overhead (including depreciation) Total cost per unit $219.40 Determine the average rate of return on the equipment. If required, round to the nearest whole percent $39.00 154.00 26.40 %

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