Define equivalent service
See this course’s project requirements
An equipment financial decision model with service-equivalent alternatives, timed costs, downtime, residual value and a conditional recommendation.
Keep your working files in your own notebook or software. Save a private description, checklist, and work link in My Proof.
What to include
- A service-equivalence screen with usable capacity and a changed-demand exclusion.
- A dated four-column cash-cost ledger with separate resale and maintenance rows.
- A present-cost table with factors, signed cash flows and final rounding.
- A contribution-based downtime row linked to service and present cost.
- A three-scenario sensitivity table with explicit dependent rows.
- A conditional capital decision brief with calculations and reversal triggers.
Review and revise
Use these criteria to check your work and choose what to improve.
- Service: every candidate is screened against usable demand.
- Finance: dated signed costs and present factors reconcile.
- Risk: downtime/residual scenarios update all dependencies.
- Decision: conditional grounds, triggers and unresolved real terms are explicit.
Want more background?
The idea in everyday life
Original fictional practice. All money is USD. No account, payment, personal record or outside participation is required. A fictional print shop needs 900 usable cutting jobs each year for three years. Buy supplies capacity 1,200, costs 2,400 now plus 200 maintenance at each year end and yields 600 resale at year 3. Lease supplies capacity 1,200, costs 100 now plus 900 at each year end, maintenance included, no resale. Repair supplies capacity 1,000, costs 600 now plus 500 at each year end, no resale. Expected lost jobs/year are buy 20, lease 10, repair 80. Each lost job forfeits 2 contribution; use an 8% annual discount rate and year-end operating costs. Ignore financing/taxes; these are exercise assumptions.
An inexpensive option that cannot deliver the required service is not an equivalent alternative.
Define equivalent service — complete worked case
An inexpensive option that cannot deliver the required service is not an equivalent alternative.
A fictional print shop needs 900 usable cutting jobs each year for three years. Buy supplies capacity 1,200, costs 2,400 now plus 200 maintenance at each year end and yields 600 resale at year 3. Lease supplies capacity 1,200, costs 100 now plus 900 at each year end, maintenance included, no resale. Repair supplies capacity 1,000, costs 600 now plus 500 at each year end, no resale. Expected lost jobs/year are buy 20, lease 10, repair 80. Each lost job forfeits 2 contribution; use an 8% annual discount rate and year-end operating costs. Ignore financing/taxes; these are exercise assumptions.
Original three-year alternatives
Paste at A1.
| AAlternative | BGross jobs/year | CNow | DAnnual end cost | EYear 3 resale | FLost jobs/year |
|---|---|---|---|---|---|
| Buy | 1200 | 2400 | 200 | 600 | 20 |
| Lease | 1200 | 100 | 900 | 0 | 10 |
| Repair | 1000 | 600 | 500 | 0 | 80 |
Copy as plain text
1. 1.1 Define
Write annual demand, horizon and service units; treat 900 as required usable jobs, not gross machine capacity.
You should see: The boundary is 900 usable jobs/year for three years.
2. 1.2 Define
Subtract lost jobs from each capacity and compare with the same demand.
You should see: 1,180 / 1,190 / 920 usable jobs; all pass 900.
3. 1.3 Define
Mark excluded/unverified service conditions beside the cost comparison rather than assigning them a cheap score.
You should see: Required service remains a gate, not a price preference.
4. 1.4 Define
Change demand to 1,000 and repeat the usable-capacity screen.
You should see: Repair 920 is below 1,000; buy/lease still pass.
What to finish
A service-equivalence screen with usable capacity and a changed-demand exclusion.
Watch for this
Comparing repair’s low cash price without subtracting downtime from usable output.
How can I tell I understand it?
Verify that your completed service-equivalence screen with usable capacity and a changed-demand exclusion meets the three lesson-specific checks and retains the supporting original records.
Quick knowledge check
Answer all 3 questions. Get at least 2 right and the lesson completes automatically.
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Answer all 3 questions above and get at least 2 right. You can review the explanations and try again.
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Source & access notes · checked 2026-10-01
Read the actual redirected public body at lease/buy section: service needs, upfront cash, maintenance and lease-term review. Tax/accounting claims in the source are not adopted as universal rules.
Access: Public primary page body opened and relevant sections read through the web reader on 2026-10-01; no account required for reading.
Reuse: Original Life Starter cases, datasets and questions; no source exercise or worked dataset reproduced. Links support further reading.
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