Title: Capital Budgeting
Course: BAC300: Management Accounting I (PEBL) > Section: LESSON SIX: Capital Budgeting

1.1  Introduction

In this first lesson, we lay the foundation for the entire course by defining the concept entrepreneurship and other related terms. Throughout our teaching experiences, we have found that an understanding of the basic principles behind the subject and their applications increases the students’ motivation for the subject. We therefore introduce you to the theories upon which entrepreneurship study is based and encourage you to engage in in-depth discussions of these concepts and theories. Since the term entrepreneurship is closely associated with small businesses, we introduce the concept of small business too. The purpose of this lesson is to enable you understand fundamental concepts and theories of entrepreneurship.

6.1 Introduction

Lesson-level overview | Lesson/week/section | 6.
Lesson name: | Capital Budgeting
Aim of the lesson: | This lesson aims at helping you understand capital budgeting, capital budgeting decisions and importance of capital budgeting in businesses.
This lesson covers:
- Capital budgeting.
- Capital budgeting decisions.
- Importance of capital budgeting in businesses.
Intended learning outcomes:
At the end of this lesson, you will be able to:

1. Define capital budgeting.
2. Explain capital budgeting decisions.
3. Discuss the importance of capital budgeting in businesses.

Overview of student activity: | 1.Pre-lesson activity – Reflecting on what comes to mind when you see the given spark on capital budgeting 2. Engaging in e-tivities 6.1, 6.2, 6.3 that involves  reading linked resources and watching videos on capital budgeting decisions 3. Interactions on the discussion forums

Constructive alignment of lesson level outcomes with module level outcomes, learning activities and assessment

(Pressing <Tab> at the end of the table will provide additional rows in the table, if required.)
Intended lesson learning outcomes: | No of module-level outcome | Activity where students engage with this outcome | Where and how is this outcome assessed?
At the end of this lesson, you will be able to:
Explain the term capital budgeting | 3 | 6.1 | 6.1 (a)  Essay question
Explain capital budgeting decisions | 3 | 6.2 | 6.2 (a) Essay question
Discuss the importance of capital budgeting | 3 | 6.3 | 6.3 (a) Essay question

Detailed explanation of ALL student and teacher engagement with the Lesson:

(This should be presented in the order that the activities take place.  So if students do work online before coming to the lecture, that should be shown ahead of what happens in class.

If there is more than one opportunity for face-to-face contact, or more than one online task, there should be a separate section for each instance, and they should be presented in the template in the same order that students encounter them.)

Content – such as lecture material – can EITHER be shown here OR added as clearly identifiable addenda to the document.  If you plan to use addenda, you should ensure that these are cross-referenced in this section.)
Module-level outcomes addressed:
Lesson six addresses module learning outcome 3, management accounting techniques in business decisions.
Purpose of the lesson/week/section:
This lesson introduces you to capital budgeting, capital budgeting decisions and the importance of capital budgeting in business.
Over to you: (a description of the process of the section)
You will start by reflecting on what comes to mind when you see the term capital budgeting before reading how capital budgeting decisions are made. You will then discuss the importance of capital budgeting in  e-tivity  6.3. You will answer the questions in the activity and post on the discussion forums given.
Pre-lesson activity: | Number of hours | 1
Investment decisions, capital expenditure decisions and acquisitions of long term assets decisions are common terms used to refer to long term decisions.

Looking at the picture above, what is it that comes to your mind in relation to capital budgeting?
Face to face time: (if applicable) | Number of hours | 1
1. Explain the learning outcomes
  1. Explain the link between the previous lesson and the current one
  2. Presentation of the ideas related to capital budgeting in the pre-lesson activity

E-tivity 6.1

Online activity: | Number of hours | 1
What should students do?
E-tivity 6.1

Read on how Capital Budgeting is used to make decisions,  and Principles of Accounting, Volume 2: Managerial Accounting (Pages 565-594) and also watch the short  video and thereafter answer the following questions;

(a) Explain the term capital budgeting

(b) Post your answers on the discussion forum 6.1, read what three of your colleagues in the tutorial group have posted and note the key ideas of capital budgeting. Add any new point to your notes
Where do they do it? | On the discussion forum 6.1
By when should they do it? | Before the next lesson.
E-moderator/tutor role
Focus the discussion and provide summary of the key ideas on capital budgeting and close the discussion
How are the learning outcomes in this lesson assessed? | Number of hours | 1
Essay questions
How does this section link to other sections of the module?
It is the introduction lesson on capital budgeting and forms the basis for further interactions on capital budgeting decisions.

E-tivity 6.2

= Total number of hours | 4 |
Online activity: | Number of hours | 1
What should students do? | E-tivity 6.2 Capital budgeting decisions are considered to be long term decisions. Some of the decisions include: Accept/Reject decisions, mutually exclusive decisions, capital rationing decisions, expansion decisions, modernization decisions, replacement decision, and lease or buy decisions and so on.  After watching video and reading Principles of Accounting, Volume 2: Managerial Accounting pp. 566-570. (a) Explain capital budgeting decisions.
Where do they do it? | In the portfolio
By when should they do it? | Before the next lesson.
E-moderator/tutor role
Mark the work in the portfolio and provide feedback to the students
How are the learning outcomes in this lesson assessed? | Number of hours | 1
6.2 (a) An essay question
How does this section link to other sections of the module?
It is a continuation of capital budgeting and sets the stage for the next lesson

E-tivity 6.3

Online activity: | Number of hours | 1
What should students do?
E-tivity 6.3

Capital budgeting normally influences the rate and direction of  business growth, reduces the complexity of the business risk, requires intensive funding, the decisions are normally irreversible, and most cases complex given that they are long term. For more on the importance of capital budgeting, watch this video and read Principles of Accounting, Volume 2: Managerial Accounting pp. 566-570 and

then;

(a) Discuss the importance of capital budgeting .

(b) Post your answers on the discussion forum ask your colleagues in the tutorial group to give feedback to your answer and note the comments and re-post the corrected answers on the discussion forum.
Where do they do it? | On the discussion forum 6.3
By when should they do it? | Before the next lesson.
E-moderator/tutor role
Focusing the discussion and providing feedback
How are the learning outcomes in this lesson assessed? | Number of hours | 1
6.3 (a) Essay question
How does this section link to other sections of the module?
This lesson gave you an opportunity to learn the preliminary steps in Capital Budgeting and lays the foundation for Capital Budgeting Techniques which is coming next

Some important questions

Which learning resources/ references will scaffold the students’ learning?
1. Kurt, H., Sierra, C. Joe, & H. (2012) Managerial accounting, Saylor Foundation.
2. Alldredge, D. (2017) Introduction to capital budgeting
3. MitchelL, F., Moyne, C. Patty, G. & Dixon, C. (2019) Principles of accounting, Vol 2:managerial accounting, OpenStax , Houston, Texas, Chapter 11
How are students enabled to access the resources? | Resources are shared in the module that is loaded in the Learning Management System (LMS) and all students have access to it. The same module is placed on the OER Africa website.
Where in this lesson are students expected to work collaboratively? | Discussion forum 6.1 and 6.3
How has an inclusive approach been incorporated in this lesson?
1. Use of multimedia resources in the module and differentiated learning activities.
2. Use university computer labs, all resources are downloadable for offline use
3. Discounted data bundles are available to students.
4. Use of accessibility button for learners with special needs on the LMS.
How will feedback on lesson be obtained from students? | You will complete an online evaluation form
How will student feedback be used to improve lesson? | By incorporating suggestions in the course for the current and subsequent cohorts’ learning experience.
At which point(s) will students receive formative feedback on the work they have done in the lesson? | Before the next lesson.