Petrofield Bhd is considering to replace a steam turbine drive. This equipment has a present MV of RM120,000 and a BV of RM30,000. It has four more years of depreciation available under MACRS (ADS) of RM3,000 per year for three years and RM9,000 in year four. (The original recovery period was nine years.) The estimated MV of the equipment four years from now is RM30,000. The total annual operating and maintenance expenses are averaging RM30,000 per year. New steam turbine drive would then be leased. Estimated annual operating expenses for the new equipment are RM25,000 per year. The annual leasing costs would be RM52,900. The MARR (after taxes) is 9% per year, t= 40%, and the analysis period is four years. (Remember: The owner claims depreciation, and the leasing cost is an operating expense). Based on an after-tax analysis, should the new equipment be leased? Base your answer on the IRR of the incremental cash flow. ANSWER: CASHFLOW TABLE FOR DEFENDER (2M) (Put in Pdf) CASHFLOW TABLE FOR CHALLENGER (2M) (Put in Pdf) NEW CASHFLOW FOR DEFENDER-CHALLENGER (1M) (Put in Pdf) PW(9%) (DEFENDER-CHALLENGER) = PW (9%) (DEFENDER-CHALLENGER) = IRR = % Conclusion/justification: (1 Mark)