Average Rate of Return-Cost Savings < Sager Industries is considering an investment in equipment that will replace direct labor. The equipment has a cost of $83,000 with a $7,000 residual value and a 10-year life. The equipment will replace three employees who has an average total wages of $18,830 per year. In addition, the equipment will have operating and energy costs of $4,030 per year. Determine the average fate of return on the equipment, giving effect to straight-line depreciation on the investment. %