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 responsibility—to 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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This lab is suitable for students who want to learn about the importance of business investment.
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.
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 will demonstrate their understanding of the key vocabulary items from this lesson.