Answer:
155%
Step-by-step explanation:
The computation of Average rate of return is shown below:-
Annual operating income = Sales - Manufacturing cost
= (4,000 × $450) - (4,000 × $264)
= $744,000
Average investment = (Initial cost + Residual value) ÷ 2
= ($940,000 + $20,000) ÷ 2
= $480,000
Average rate of return = Average annual operating income ÷ Average investment
= $744,000 ÷ $480,000
= 155%