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Determine the average rate of return on the equipment

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Reference no: EM132233547

Question - Galactic 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 4,600 units at $178 per unit. The equipment has a cost of $513,400, residual value of $38,600, and an eight-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows:

Cost per unit: Direct labor $29.00

Direct materials 111.00

Factory overhead (including depreciation) 18.80

Total cost per unit$158.80

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

Reference no: EM132233547

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