8.8 Self-Test Machines K and L are mutually exclusive and have the following investment and operating costs. Note that machine K lasts for only 2 years. Year 0 2 3 $10,000 $1,100 $1,200 12,000 1,100 1,200 $1,300 a. Calculate the equivalent annual annuity of each investment by using a dis- count rate of 10%. which machine is the better buy? b. Now suppose you have an existing machine. You can keep it going for 1 more year only, but it will cost $2,500 in repairs and $1,800 in operating costs. Is it worth replacing now with either K or L