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 $280 per unit. The equipment has a cost of $640,000, residual value of $50,000, and an 8-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 ……………………………………....…….. $ 45.00

Direct materials ……………………………………..…. 180.00

Factory overhead (including depreciation) …. 32.00

Total cost per unit …………………………………… $257.00

Determine the average rate of return on the equipment.