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03-16-2014, 02:40 PM

Financial Management, Construction Economics, and Budget Control:

Analyzing Investments

Lesson Plan #9

LESSON GOALS AND OBJECTIVES:

This lesson completes the construction economics instruction. Students will be able to use net present value, equivalent annual worth, or internal rate of return to compare potential investments.

LESSON RATIONALE:

This lesson applies the construction economics tools learned in Lesson 8 for analysis of alternative investments and opportunities.

KEY CONCEPTS:

o Net present value

o Equivalent annual cost

o Internal rate of return

TRAINER PREPARATION REQUIRED:

Prior to the beginning of the lesson, the trainer shall read through the articles listed in required reading and determine relevant examples, from real-life experience, to facilitate classroom discussions. Also, the trainer should have a good understanding of the material covered in the lecture slides provided in the module packet.

MATERIALS AND TEACHING AIDS REQUIRED:

o Required reading for reference

o Notes on real-life experiences to facilitate classroom discussions

o PowerPoint presentation slides (provided in module)

o In-class example problem with solution for discussion (provided in module)

REQUIRED READING: (specific to this lesson)

Hendrickson, C., (2003). Project Management for Construction. Chapters 6.1 – 6.6. Available online at: http://www.ce.cmu.edu/pmbook/.

Wikipedia, Net Present Value, Available online at Net present value - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Net_present_value).

Wikipedia, Equivalent Annual Cost, Available online at Equivalent annual cost - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Equivalent_Annual_Cost).

Odellion Research, Internal Rate of Return, Available online at odellion.com (http://www.odellion.com/pages/online%20community/IRR/financialmodels_irr_definition.htm).

ADDITONAL READING: (specific to this lesson)

None.

LESSON OUTLINE AND INSTRUCTION PROCEDURES

*Trainer, please reference the Notes Version of the lecture slides provided for this module. They contain specific directions on when to solve examples, have discussions, and perform in-class problems.

Collect the Lesson 8 Assignment at the start of class.

Begin the lesson with a brief open forum class discussion to discuss the content of the required reading. Be sure to ask questions to increase student involvement.

Topic One: Analyzing Investments

o Net Present Value

o Dealing with alternatives with unequal lives

o Internal Rate of Return

Work the solution to the example IRR calculation for the students (provided in module).

o Comparison by IRR method

After reviewing the guidelines for the comparison process, have the students try the IRR Comparison example. Give the students 5 – 10 minutes to solve before showing the solution.

ASSESSMENT AND EVALUATION:

Upon completion of the lesson, review the Lesson 9 assignment included with the lesson module. The students must turn in the completed assignment at the start of the next lesson. The solution set is provided as part of the module.

Let the students know that the final exam in the next module is open book and open note. They are welcome to bring their notes, assignments, etc. to the exam. They should also bring a calculator.

The last 10 minutes of the class should be reserved for the completion of the class feedback evaluation by the students and the instructor.

Analyzing Investments

Lesson Plan #9

LESSON GOALS AND OBJECTIVES:

This lesson completes the construction economics instruction. Students will be able to use net present value, equivalent annual worth, or internal rate of return to compare potential investments.

LESSON RATIONALE:

This lesson applies the construction economics tools learned in Lesson 8 for analysis of alternative investments and opportunities.

KEY CONCEPTS:

o Net present value

o Equivalent annual cost

o Internal rate of return

TRAINER PREPARATION REQUIRED:

Prior to the beginning of the lesson, the trainer shall read through the articles listed in required reading and determine relevant examples, from real-life experience, to facilitate classroom discussions. Also, the trainer should have a good understanding of the material covered in the lecture slides provided in the module packet.

MATERIALS AND TEACHING AIDS REQUIRED:

o Required reading for reference

o Notes on real-life experiences to facilitate classroom discussions

o PowerPoint presentation slides (provided in module)

o In-class example problem with solution for discussion (provided in module)

REQUIRED READING: (specific to this lesson)

Hendrickson, C., (2003). Project Management for Construction. Chapters 6.1 – 6.6. Available online at: http://www.ce.cmu.edu/pmbook/.

Wikipedia, Net Present Value, Available online at Net present value - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Net_present_value).

Wikipedia, Equivalent Annual Cost, Available online at Equivalent annual cost - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Equivalent_Annual_Cost).

Odellion Research, Internal Rate of Return, Available online at odellion.com (http://www.odellion.com/pages/online%20community/IRR/financialmodels_irr_definition.htm).

ADDITONAL READING: (specific to this lesson)

None.

LESSON OUTLINE AND INSTRUCTION PROCEDURES

*Trainer, please reference the Notes Version of the lecture slides provided for this module. They contain specific directions on when to solve examples, have discussions, and perform in-class problems.

Collect the Lesson 8 Assignment at the start of class.

Begin the lesson with a brief open forum class discussion to discuss the content of the required reading. Be sure to ask questions to increase student involvement.

Topic One: Analyzing Investments

o Net Present Value

o Dealing with alternatives with unequal lives

o Internal Rate of Return

Work the solution to the example IRR calculation for the students (provided in module).

o Comparison by IRR method

After reviewing the guidelines for the comparison process, have the students try the IRR Comparison example. Give the students 5 – 10 minutes to solve before showing the solution.

ASSESSMENT AND EVALUATION:

Upon completion of the lesson, review the Lesson 9 assignment included with the lesson module. The students must turn in the completed assignment at the start of the next lesson. The solution set is provided as part of the module.

Let the students know that the final exam in the next module is open book and open note. They are welcome to bring their notes, assignments, etc. to the exam. They should also bring a calculator.

The last 10 minutes of the class should be reserved for the completion of the class feedback evaluation by the students and the instructor.