Oahu 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 4,700 units at $192 per unit. The equipment has a cost of $480,800, residual value of $36,200, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows:

Line Item Description	Amount
Cost per unit:
Direct labor	$32.00
Direct materials	123.00
Factory overhead (including depreciation)	21.05
Total cost per unit	$176.05

Determine the average rate of return on the equipment. If required, round to the nearest whole percent.

Answer rating: 100% (QA)

The average rate of return ARR on the equipment can be calculated using the following fo... View the full answer