Northwest Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $142,000 with a $12,000 residual value and a five-year life. The equipment will replace one employee who has an average wage of $45,940 per year. In addition, the equipment will have operating and energy costs of $13,780 per year. Required:
Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.

Richardson hired j.c. flood company, a plumbing contractor, to correct a stoppage in the sewer line of her house. the plumbing company's 'snake' device, used to clear the line leading to the main sewer, became caught in the underground line. to release it, the company excavated a portion of the sewer line in richardson's backyard. in the process, the company discovered numerous leaks in a rusty, defective water pipe that ran parallel with the sewer line. to meet public regulations, the water pipe, of a type no longer approved for such service, had to be replaced either then or later, when the yard would have to be excavated again. the plumbing company proceeded to repair the water pipe. though richardson inspected the company's work daily and did not express any objection to the extra work involved in replacing the water pipe, she refused to pay any part of the total bill after the company completed the entire operation. j.c. flood company then sued richardson for the costs of labor and material it had furnished. (c) for what, if anything, should richardson be liable? explain."