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UNDERSTANDING BY DESIGN PLAN IN ENTREPRENEURSHIP 1

Topic: Return on Investment Subject:Entrepreneurship 1 Big Idea: How to Calculate Simple ROI for the Cash Flows Analysis Year Level: First Year Allocated Time: September 21, 2011 (1 daya) Designer: Jenfrida H. Navarro

STAGE 1: Thinking Through Goals: At the end of the lesson the students will be able to: a. Know the meaning of Return on Investment; b. Understand the formula to calculate the simple ROI; c. Analyze the Cash flow how to calculate the simple ROI;

Enduring Understanding A measure of a corporation's profitability, equal to a fiscal year's income divided by common stock and preferred stock equity plus long-term debt. ROI measures how effectively the firm uses its capital to generate profit; the higher the ROI, the better. Simple ROI is equal to gains subracted by investment cost and divided by investment cost then multiply 100 for the percentage. Simple ROI works well when both the gains and the costs of an investment are easily known and where they clearly result from the action.

Essential Questions: What is Return on Investment?

What is the formula of Simple ROI?

How to calculate the simple ROI for the Cash Flow Analysis?

Topical Questions: What is Return on Investment? What is the importance of ROI? What is the formula of ROI? How to calculate Simple ROI in Cash Flows Analysis?

Students will know: The definition of Return on Investment. The importance of ROI. The formula of ROI. Calculate the Simple ROI for the Cash Flow Analysis.

Students will be able to: Know the meaning of Return on Investment. Cite the importance of the importance of ROI. Analyse the Formula of ROI. Find out to get the simple ROI.

STAGE 2: Assesment/Evidence

Activity: Application Call the students to the front and compute the year 4 and year 5 in ivestment A after the discussion then explain it on the class.

Other Evidences: Analyse the formula Quiz about Return on Investment

STAGE 3: Learning Activities

Teaching-Learning Episodes Day 1: How to Calculate the Simple ROI for the Cash Flow Analysis 1. Preparation 2. The teacher will ask the essential questions What is Return on Investment?, How to Calculate the Simple ROI for the Cash Flow Analysis?. 3. The student will be analyse the formula of Simple ROI. 4. The teacher and students will have simultaneous discussion on the topic. 5. The teacher conclude and enhance of the students learning how to compute by using a formula. 6. The teacher have an activity, she orients do which is Application 7. Activity (Individual) Application Call the students to the front and compute the year 4 and year 5 in ivestment A after the discussion then explain it on the class. 8. The teacher will be check her students if they are correct. 9. The teacher have a quiz to test the student if they understand the lesson. 10. The teacher explain the assignment to be given on the students for the next meeting.

Check your Understanding: Complete the table (Investment B). What the Simple ROI of each year by using the formula.
Investment B Cash Inflows B Cash Outflows B Net Cash Flow B Cumulative CF B Simple ROI B Now 0 100 100 100 -100.0% Year 1 100 30 70 30 Year 2 90 30 60 30 Year 3 75 35 40 70 Year 4 50 20 30 100 Year 5 40 20 20 120 Total 355 235 120

Concept Mapping:
Calculate the Simple ROI for the Cash Flow Analysis

Definition of ROI

Analyze the formula

A measure of a corporation's profitability, equal to a fiscal year's income divided by common stock and preferred stock equity plus long-term debt. ROI measures how effectively the firm uses its capital to generate profit; the higher the ROI, the better.

Serious Problem of using ROI

Simple ROI=GainsInvestment Cost/Investment Cost*100

The sole basis for decision making, is that ROI by itself says nothing about the likelihood that expected returns and costs will appear as predicted. ROI by itself, that is, says nothing about the risk of an investment. ROI simply shows how returns compare to costs if the action or investment brings the results hoped for.

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