Introduction

Overview

In Lesson 3, we will learn about Annual Percentage Rates (APR), Salvage Values, Bond Investments, Financial Costs, and Opportunity Costs of Capital. APR is another rate that is important to this class. Bond is a common investment tool these days. After this lesson, students will also be able to distinguish the financial cost of capital and the opportunity cost of capital. Similar to the previous lesson, the introduction in this class will be based on examples, textbook reading, and assigned reading materials.

Learning Objectives

At the successful completion of this lesson, students should be able to:

• understand Annual Percentage Rate and how to calculate it;
• evaluate the value of a bond and understand the cash flow pattern of a bond;
• demonstrate the concept of financial cost of capital and opportunity cost of capital; and
• evaluate a project(s) using Net Present Value, Benefit Cost Ratio, and Present Value Ratio.

What is due for Lesson 3?

This lesson will take us one week to complete. Please refer to the Course Syllabus for specific time frames and due dates. Specific directions for the assignment below can be found within this lesson.

Questions?

If you have any questions, please post them on our discussion forum (not email), located under the Modules tab in Canvas. I will check that discussion forum daily to respond. While you are there, feel free to post your own responses if you, too, are able to help out a classmate.