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 4,900 units at $173 per unit. The equipment has a cost of $546,800, residual value of $41,200, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor Direct materials Factory overhead (including depreciation) Total cost per unit $27.00 107.00 18.60 $152.60 Determine the average rate of return on the equipment. If required, round to the nearest whole percent.
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 4,900 units at $173 per unit. The equipment has a cost of $546,800, residual value of $41,200, and an 8-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor Direct materials Factory overhead (including depreciation) Total cost per unit $27.00 107.00 18.60 $152.60 Determine the average rate of return on the equipment. If required, round to the nearest whole percent.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text: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 4,900 units at $173 per unit. The equipment has a cost of $546,800, residual value of $41,200, and an 8-year life.
The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows:
Cost per unit:
Direct labor
Direct materials
Factory overhead (including depreciation)
Total cost per unit
$27.00
107.00
18.60
$152.60
Determine the average rate of return on the equipment. If required, round to the nearest whole percent.
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