Introduction

Investment appraisal is the action of determining if a business purchase will bring a profit. It is also used to compare investment opportunities to decide which is worth choosing. 

There are three calculations you can use to help make this investment decision: "payback period" (PBP), "average rate of return" (ARR), and "net present value" (NPV).

The PBP shows how much time it will take until a business has earned back the cost of the investment using its net cash flow.

The ARR shows the profitability of an investment over a given period of time.

The NPV uses the "discounted cash flow" calculation to compare investments that cost the same.

Course curriculum

  • 1

    Course Information & Support

    • Please Check Now That Your Phone Is In Your Bag. Please Stay For 40 Minutes Of Learning & Sign Out For The Bathrrom During The Last 5 Minutes of Class.

    • Chapter 3.8 Class Schedule

    • Fact Sheet Packet Of Class Policies- Please Scroll Through And Review Again

    • How Well Are You Demonstrating The IB Learner Characteristics? Which Is Your Super Power & Which Presents The Greatest Challenge?

    • Welcome IB Business Management Student

    • Chapter Work Cycle = This Is What We Are Doing In Class & For Homework Every Day

    • Finished Early? Don't Pack Up! Do This ...

    • Please Don't Disrupt Our 40 Minute Work Cycle. Leave For The Bathroom During The LAST 5 MINUTES Of Class.

    • Your Quarter Grade
  • 2

    Your Notebook Is Your Most Important Weekly Grade & Prepares You For The May Exams

    • New 3.8 Chapter = 5 Headings

    • Read The Rules For Your Notebook Before Every Grading Day. This Paper Must Be Stapled Onto The Inside Cover Of Each Composition Notebook

    • Video: Watch A Spider Map Being Created (Best Study Tool)

    • How To Draw A Spider Map

    • LOOK: Page-By-Page Visual Instructions For Earning a 100% On Every Notebook Chapter. (NEW For 2024)

    • Video: Take A Tour Of A Business Management Composition Notebook

    • This Is How Your Notebook Pages Will Be Graded

    • Notebook Checklist & Reflection Sheet- Print, Complete, And Staple Onto The Last Page Of Your Chapter Notes BEFORE Scoring Day. It's Best To Pick Up This Blue Color Checklist In Class After We Finish The Chapter Review.
  • 3

    "RESOURCE BANK" = Topic Lessons (31) Begin Below this Point:

    • What is the Resource Bank?

    • RB = 5 Sections With 31 Posts (= 2 RB Days + HW)

    • What You Should Be Able To Do By The End Of This 3.8 Course
  • 4

    Key Terms

    • Video: The Time Value Of Money

    • Video: What Is Inflation & Why Does It Matter?

    • Video: The Difference Between Saving, Investing & Speculating

    • Video: What Is An Investment?

    • Introduction To Investment Appraisal

    • Video: Capital Expenditure Is Used For Making Investments Which Should Bring Back A "Return" (=$$$)

    • Exam Tip: What Data Is Needed To Make An Appraisal? SAY THIS & DO THIS ON THE IB EXAM!

    • Handout: How to Compare Two Different Investments

    • Handout: Cash Flow Forecasting Helps Handle Future Uncertainty

    • Handout: Definitions & Exam Tip Concerning Cash Inflows & Outflows

    • Video: Mr. B's Investment Appraisal Review- Watch & Take Notes Until 7:25
  • 5

    Payback Period

    • Video: Payback Method of Investment Appraisal (TTB)

    • Video: Payback Period (T2U)

    • Video: Payback Period Tutorial (BBB)

    • Video: Mr. B Reviews The Payback Period Method
  • 6

    Average Rate Of Return (ARR)

    • Video: ARR (TTB)

    • Video: How To Calculate The Average Rate Of Return With A Worked Example (T2U)

    • Video: ARR Tutorial (BBB)

    • Handout: Example Of An ARR Calculation

    • Video: Mr. B Works Out An Average Rate Of Return Example

    • Handout: You Must Take These 3 Factors Into Account When Deciding If An ARR On An Investment Is Actually Good
  • 7

    Discounted Cash Flows

    • Video: What Is "Discounted Cash Flow"? (DCF)

    • Handout: Why Discount Future Cash Flows?

    • Optional Video: How To Value A Company Using Discounted Cash Flow (DCF)

    • Video: Discounted Cash Flow - Net Present Value (T2U)
  • 8

    Net Present Value

    • Handout: 2 Factors Must Be Considered When Looking At The Present Value Of Future Money

    • Video: Net Present Value (from TTB)

    • Video: How To Calculate Net Present Value (BBB)

    • Video: How To Calculate Net Present Value (T2U)

    • Exam Tip: How To Use The Discount Table On The IB Exam

    • Handout: An Example Of An NPV Calculation = 4 Steps

    • Video: IB BM Teacher Works Out An NPV Exam Question
  • 9

    Investment Appraisal & The CCES Concepts (Creativity-Change-Ethics-Sustainability)

    • What Do These Global Conglomerates Invest In?

    • Read These CCES Definitions. If You Write Them On Your May Exams You Get Credit For Clear Evidence of "Synthesis & Evaluation"

    • CCES Assignment: Write 4 CCES Impact Statements For This Chapter Following The Given Model

    • Finished Early? Don't Pack Up! Do This ...
  • 10

    Let's Do Some Case Studies

    • Visual Of Case Study Day 1 Process

    • Day 1 Participation Requirements During Sharing

    • Instructions for Analyzing Case Studies

    • New Command Terms Definitions List (2024+) Exams = Rules for Answering Test Questions

    • Old Command Terms List = Rules for Answering Test Questions

    • Shorter Assignment: 3.8 Assigned Case Studies (5 Cases)

    • Show Your Teacher Your Completed Case Studies Then ...

    • Visual Of Case Study Day 2 Process (Show & Tell Your Presentation- Don't Pass It Around- Give Command Term Definitions)

    • Finished Early? Don't Pack Up! Do This ...
  • 11

    Review Activities

    • WATCH: 3.8 Chapter Review

    • Instruction Sheet for Review Assignment

    • What Should You Do If You Get Stuck On A Question? Don't Skip It! Do This...

    • New 3.8 Review Worksheets With 5 Tasks 1-20 M/C (Title The Top Of A New Page. Then Label The Tasks And Write The Answers In Your Composition Notebook)

    • Put Away Your Pen & Pencil On Review Day- Only Have A Color Pen On Your Desk

    • 3.8 Quizlet

    • Have You Achieved the 3.8 Key Learning Outcomes?

    • You Are Almost Finished!

    • Don't Forget The Last Piece!

    • Finished Early? Don't Pack Up! Do This ...

    • Memorize & Review The 3.8 Exam Formulas
  • 12

    Exam Review & Practice: Do These Practice Questions Before Your May Exams (Don't Look At The Markscheme Until You Have Written A Complete Answer)

    • Video: IB May Exam Review For Investment Appraisal

    • IB Exam Practice: Payback Period

    • IB Exam Practice: ARR & PBP

    • IB Exam Practice: ARR & PBP & NPV
  • 13

    3.8 Quiz Scheduled

    • Come Here On Quiz Day If You Are In The Classroom - Makeups Are On The Day You Return

    • Visual: Quiz Day Schedule Of Activities

    • Did You Finish The 3.8 Exam Review & Practice?

    • After This 3.8 Quiz Complete The 3.8 Tasks In The Official IB BM May Exam Prep Course