The Life Starter
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Course Library · Lesson 5 of 6
Money · Guided lesson

Stress-test utilization and resale

About 16 minutes · 4 reading + 12 practice and checks
Time includes reading, practice, and questions. Extra videos or further study are optional.
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.
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Before you begin

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.

The idea

A sensitivity changes an uncertain input and follows all its dependencies.

Follow along

Stress-test utilization and resale — complete worked case

A sensitivity changes an uncertain input and follows all its dependencies.

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.

AAlternativeBGross jobs/yearCNowDAnnual end costEYear 3 resaleFLost jobs/year
Buy1200240020060020
Lease1200100900010
Repair1000600500080

Copy as plain text
  1. 1. 5.1 Stress-test

    Select resale, demand and contribution as three separate uncertain inputs; retain the baseline.

    You should see: Each scenario names what changed and what remained fixed.

  2. 2. 5.2 Stress-test

    Remove resale and add its discounted value back to buy present cost.

    You should see: Increase 476.30 at the stated rate/time.

  3. 3. 5.3 Stress-test

    Raise demand to 1,000 and repeat the capacity gate before comparing costs.

    You should see: Repair is excluded, buy/lease remain eligible.

  4. 4. 5.4 Stress-test

    Raise contribution to 3/job and update all annual downtime rows, then state the scope of the new ranking.

    You should see: Costs change but lost job counts and usable capacity stay fixed.

Now change one thing

A new resale receipt is 500 at the end of year two, discounted at 10%. Enter its present value rounded to two decimals.

Your work

What to finish

A three-scenario sensitivity table with explicit dependent rows.

Common mistake

Watch for this

Changing a cost label without updating its linked service or timing.

How can I tell I understand it?

Verify that your completed three-scenario sensitivity table with explicit dependent rows meets the three lesson-specific checks and retains the supporting original records.

Try 3 questions

Quick knowledge check

Answer all 3 questions. Get at least 2 right and the lesson completes automatically.

Not yet passed

You’ll get an explanation for each answer. Signed in? Your results save to your account.

1Resale drops to zero but no other input changes. Which buy row changes?
2Demand rises while machine capacity/lost jobs stay fixed. What should be tested first?
3Contribution rises from 2 to 3 per lost job. What stays unchanged under that isolated scenario?
0 of 3 answeredApply the lesson to a short question, then review the explanation.
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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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Sources and further reading

Explore the references behind this lesson.

Open Stax: Discounted capital decisions
Source & access notes · checked 2026-10-01

Read discounted cash flow and comparison limits. Course compares present costs for equivalent service, not a promised return.

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.

Open Stax: Time value and present values
Source & access notes · checked 2026-10-01

Read time value, lump-sum/annuity and timing discussion. Original three-year cost ledger and 8% assumption are supplied here, not source examples.

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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