Lakeland Company is considering the purchase of equipment for \($150,000\) The 4 equipment will expand the Company’s production and increase revenue by \($40,000\) per year.

Annual cash operating expenses will increase by \($10,000.\) The equipment’s useful life is 10 years with no salvage value. Lakeland uses straight-line depreciation. The income tax rate is 35%. What is the average rate of return on the investment?