Ray Zor 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 4,000 units at $ 410 per unit. The equipment has a cost of $ 525,000, residual value of $ 75,000, and an eight-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone is shown below.

Cost per unit:

Direct labor ..................$ 30

Direct materials ............... 280

Factory overhead (including depreciation) ...... 40

Total cost per unit ............... $ 350

Determine the average rate of return on the equipment.