Lesson Plan

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Lesson Plan
Grade: Date: 17/01/2026
Subject: Business
Lesson Topic: the meaning, calculation and interpretation of accounting rate of return (ARR)
Learning Objective/s:
  • Describe the concept and purpose of the Accounting Rate of Return (ARR) in investment appraisal.
  • Calculate ARR using the standard formula and average annual accounting profit.
  • Interpret ARR results by comparing with the required rate of return and discuss its limitations.
Materials Needed:
  • Projector or interactive whiteboard
  • Slide deck covering ARR theory and example
  • Calculator or spreadsheet software
  • Printed worksheet with practice problem
  • Whiteboard markers
 Introduction:
Begin with a quick poll: Which investment appraisal method do you find most intuitive? Review briefly the payback period covered in the previous lesson, linking it to today’s focus on profitability measurement. Explain that by the end of the session students will be able to calculate and evaluate ARR against a hurdle rate.
Lesson Structure:
  1. Do‑now (5') – students answer a recall question on the payback period on the board.
  2. Mini‑lecture (10') – introduce ARR definition, formula, and components using slides.
  3. Guided calculation (15') – work through the machine example together, showing each step.
  4. Independent practice (10') – students complete a worksheet problem while the teacher circulates.
  5. Class discussion & check (5') – groups share ARR results, compare with the hurdle rate, and discuss limitations.
Conclusion:
Summarise that ARR measures average profitability and must be benchmarked against the required return. Ask each student to write one key limitation of ARR on a sticky note as an exit ticket. Assign homework: calculate ARR for a new case study provided on the class portal.