Lesson Plan

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Lesson Plan
Grade: Date: 05/03/2026
Subject: Business
Lesson Topic: comparison of investment appraisal methods, including their limitations
Learning Objective/s:
  • Describe the four main investment appraisal methods (Payback, ARR, NPV, IRR) and their key features.
  • Compare the advantages and limitations of each method, focusing on time‑value of money, risk and profitability.
  • Apply the methods to a simple project scenario to calculate Payback, ARR, NPV and IRR.
  • Evaluate which method(s) are most appropriate given quantitative results and qualitative factors.
  • Communicate a justified investment decision using a structured decision‑making process.
Materials Needed:
  • Projector and screen
  • Whiteboard and markers
  • Handout with summary table of methods
  • Calculator or spreadsheet software (Excel)
  • Printed sample investment case data
  • Sticky notes for group brainstorming
 Introduction:

Begin with a quick recall question about cash flow versus profit to activate prior knowledge. Explain that today’s focus is on how businesses decide whether a capital project is worth pursuing. Outline the success criteria: students will be able to calculate, compare and justify the use of different appraisal methods.
Lesson Structure:
  1. Do‑now (5'): Quiz on profit, cash flow and time value of money.
  2. Mini‑lecture (10'): Introduce Payback Period and Accounting Rate of Return (ARR) with formulas.
  3. Guided practice (12'): Students calculate Payback and ARR for the sample case using calculators.
  4. Mini‑lecture (10'): Explain Net Present Value (NPV) and Internal Rate of Return (IRR), showing interpretation.
  5. Group activity (15'): Teams compute NPV and IRR in Excel and compare outcomes.
  6. Comparative analysis (8'): Whole‑class discussion using the summary table to highlight advantages/limitations.
  7. Decision‑making simulation (10'): Students follow the suggested decision process and record a recommendation on sticky notes.
  8. Check for understanding (5'): Exit ticket – list one advantage and one limitation for each method.
Conclusion:

Recap the key take‑aways: each method offers a different lens on project viability and has specific limitations. Collect exit tickets to gauge understanding and assign homework to analyse a new case using the same four methods.