Lab Description
In this lab, we will immerse students in the challenging world of investment decision-making through a real-life scenario.
The storyline begins with a revelation from the restaurant owners, Bill and Lydia, acknowledging the existence of a significant problem that has plagued the business for months. As one of the shift leaders, students find themselves presented with a unique opportunity and an immense responsibilityâto spearhead a renovation project that could potentially turn the business around.
Students are given an initial amount of $100,000 and they have to make decisions on how much money to invest in the four areas of the business - Advertisement, Hiring Workers, Training Workers, and Buying Equipment. Their target is to adjust the investments so that the expected net return is more than $220,000
Students will use ROI, Marginal ROI, Gross Margin, and Net Margin computations to understand how Financial Metrics help to make better decisions
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Who this course is for
This lab is suitable for students who want to learn about the importance of business investment.
Building Your Understanding (39 Minutes)
Sub Activities
- Review Questions
Students will know the difference between the Gross Benefit and the Net Benefit of an investment.
Students will learn the formula for ROI and see that it tells you the value of the total investment but not how much to invest to maximize the Net Benefit.
Students will learn the difference between ROI and Marginal ROI and understand how to apply Marginal ROI to solve economic problems.
Applying Your Understanding (41 Minutes)
Students demonstrate that they can use the concept of Marginal ROI to allocate an investment budget across 4 possible investments that results in the largest possible improvement to their profit.
Students should learn how to calculate a Gross Margin and Net Margin.
Students will demonstrate their understanding of the key vocabulary items from this lesson.
- Price per Classroom$9 99$50.00
- Duration 30 Minutes
- Activities 20
- Grade 8-12
National Standards in Financial Education
Students will know that Investors in financial assets expect an increase in value over time (capital gain) and/ or receipt of regular income, such as interest or dividends .. Students will use this knowledge to 8-1a . List the potential benefits of investing money in a financial asset . 8-1b . Explain why some people might prefer to buy investments that grow in value over time instead of investments that pay regular income .
Students will know that Common types of financial assets include certificates of deposit (CDs), stocks, bonds, mutual funds, and real estate .. Students will use this knowledge to 8-2a . Define common types of financial assets . 8-2b . Demonstrate how to find the current prices of stocks, bonds, and mutual funds . 8-2c . Discuss how some financial assets can be harder to sell quickly (e .g . stocks traded on an exchange versus real estate) .
Students will know that Investors who buy corporate or government bonds are lending money to the issuer in exchange for regular interest payments .. Students will use this knowledge to 8-3a . Compare corporate and government bonds . 8-3b . Calculate the amount of annual interest income an investor would receive from a corporate bond offering at a given coupon interest rate .
Students will know that Different types of investments expose investors to different degrees of risk .. Students will use this knowledge to 8-6a . Compare rates of return on different types of investments and order them by risk . 8-6b . Identify investments that would be most appropriate for people who are uncomfortable with taking financial risk .
Students will know that The benefits of compounding for building wealth are greatest for people who invest regularly over longer periods of time .. Students will use this knowledge to 8-7a . Explain the concept of compounding . 8-7b . Estimate the future value of a lump sum invested today for a specified period of time and rate of return . 8-7c . Estimate the future value of a regular series of equal annual investments for a specified period of time and rate of return . 8-7d . Demonstrate the difference in wealth accumulation for a person who begins to invest regularly at age 30 versus someone who starts at age 40 .