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^^^64j,Course: 01.411 Agricultural Business and Management
Unit 8: Investments
Lesson 1: Value of Money
QCC: 61, 64, 65, 75
Objectives:
1. Calculate the value of money as affected by inflation and deflation.
2. Predict future value of money using interest rate tables and compounding.
3. Calculate the present value of money using discounting tables.
Teaching Time:
2 hours
References:
Deere and Company. Farm and Ranch Business Management. Moline, IL. ISBN: 0-86691-135-9.
Georgia Ag. Ed. Curriculum cd,pp_Financial Analysis
Materials and Equipment:
Calculators (financial)
Computer
Software: "Stake your Acres" (Farm Works)
Software: "The Farming Game" (AAVIM)
Monopoly Game
LCD Projector
Teaching Procedure
Introduction and Mental Set
Ask students if they know the rule of 72. The rule of 72 is: if money is drawing interest, you can determine how long it will take for your money to double by dividing the interest rate into 72. Example: You deposit $100 in a savings account that pays 6% interest. 72/6 = 12. It will take 12 years for your money to double to $200. If the interest rate is 8%, it will take 9 years for the money to double.
Discussion
1. Ask students to define and discuss the following terms:
A. Capital profit
B. Inflation
C. Deflation
D. Interest compounding
E. Discounting
F. Annuities
G. Investment
H. Lease
I. Payback analysis
2. Assign students to read page 8-1 of text chapter 8. Discuss.
A. Which funds should be invested?
B. How can analyzing capital requirements affect investments?
C. What does the index of profitability show?
3. Assign pages 8-2 to 8-5 of the Farm and Ranch Business Management text and discuss. Give sample money value problems.
A. How does time affect the value of an investment?
B. What is the difference in simple and compounded interest?
C. What is compounding?
D. What is discounting?
E. Using compounding tables on page 8-4, determine the value of $1000 drawing 8% interest in 5 years.
F. Using the discounting table on page 8-5, determine the present value of $1000 that is to be received in 6 years at 6% interest.
4. Assign study guide in Student Guide for chapter 8, section I; A-L, go over, and discuss with the students.
5. Let the students complete assignment #1 in Student Guide, p. 8-5 for a grade or you may elect to use it for practice.
Summary
Have students play:
Monopoly Game
Stake Your Acres
The Farming Game
Evaluation
Written test
Course: 01.411 Agricultural Business and Management Unit 8, Lesson 1
Revised May 2007 PAGE 1
Georgia Agriculture Education Curriculum
Course: 01.411 Agricultural Business and Management Unit 8, Lesson 1
Revised May 2007 PAGE 2
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