Scenario $2$:

Crotekch Power Sdn$.$ Bhd$.$ installed a diesel$-$electric unit costing RM$50,000$ at a remote

site because no dependable electric power was available from a public utility five years

ago. The company has computed the depreciation by straight $-$line method with a useful

life of $10$ years and a zero$-$salvage value. Annual operation and maintenance expenses

are RM$16,000$ and property taxes and insurance cost another RM$3,000$ per year.

Dependable electric service is now available at an estimated annual cost of RM$30,000.$

The company wishes to know whether it would be more economical to dispose of the

diesel$-$electric unit now, when it can be sold for RM$35,000,$ or to wait five years when the

unit would have to be replace anyway $($with no Market Value$).$ The company has an

effective income tax rate of $50\%$ and tries to limit its capital expenditures to opportunities

that will earn at least $15\%$ per year after income tax. What would you recommend?