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EXERCISE 2: Minx Company purchases a piece of equipment for $36,000. The equipment has an expected useful life of 8 years and no salvage value. The equipment is expected to produce new revenue for the company in the amount of $10,000 per year. Calculate the Unadjusted Rate of Return using the following formula: Unadjusted Rate of Return = Average Increase Net Income / Average Cost of Investment Start by calculating the annual average Net Income (numerator): $ Annual Revenue LESS: Depreciation per year EQUALS: Annual Net Income ) $ $ Next, calculate the Average Cost of Investment (denominator): Subtotal Divide by: 2 Average Amount Invested /2 $ Now, calculate the Unadjusted Rate of Return: Annual Net Income (from above) Divide by: Average Amount Invested (from above) Equals Unadjusted Rate of Return (round to one place past the decimal and express answer as a percent) $ /$ %