Hana 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 10,000 units at $300 per unit. The equipment has a cost of $4,500,000, residual value of $500,000, and a 10-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows:

Cost per unit:

Direct labor.....................................................................................$ 18.00

Direct materials...............................................................................90.00

Factory overhead (including depreciation)..................................112.00

Total cost per unit...........................................................................$220.00

Determine the average rate of return on the equipment.