Popular Culture Helps Students Engage in Multimedia Projects

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Salika A. Lawrence | Kelly McNeal | Melda N. YildizBy using
popular culture,
teachers can help students
engage in a variety of
multimedia projects that
help them make connections
between reading, writing,
and technology.
Summer Program Helps Adolescents Merge
Technology, Popular Culture, Reading, and
Writing for Academic Purposes
Research has documented that adolescents engage in many
literacy prac-
tices outside of school (Cutler, 1999; Fisher, 2003; Hinchman,
Alvermann,
Boyd, Brozo, & Vacca, 2003/2004; Mahiri & Sablo, 1996;
Moje, 2000),
where they have the choice and freedom to make their own
decisions with

few restrictions and opportunities to interact with a wide array
of texts in
different forms. Recent reports suggest that today’s adolescents
have “mul-
tiple literacies” (King & O’Brien, 2002) because they interact
with multiple
forms of nontraditional texts and different sources of
information, access
popular culture and mass media, and communicate with people
from diverse
backgrounds and perspectives through the use of new
technologies (Moore,
Bean, Birdyshaw, & Rycik, 1999). Adolescents’ current reliance
on technol-
ogy prompts a redefinition of literacy that represents a
generation of youths
who read less print-based text (Collier, 2007) and rely instead
on visual im-
ages as a means of comprehending text while sorting through a
plethora of
digital information, technology, and media. Although they now
“read” more
images, youths still need and use critical thinking skills such as
exploring

and critiquing the “text” when they shift through different
sources of digital
information.
Previous research falls short of distinguishing between the
technological
literacy practices adolescents engage in outside of school,
namely e-mailing
and surfing the Web (Moore et al., 1999), and the academic and
critical lit-
eracy expectations identified in media and visual literacy
standards, name-
ly evaluating sources, synthesizing information, and using
different media.
These practices ref lect “21st-century literacies...[which]
includes new ideas
about what can be considered texts” (Collier, 2007, p. 4) and
students’ interac-
tions with those texts.
Collier (2007) reported that students in our 21st-century context
increas-
ingly interact with nontraditional texts such as rap lyrics and
graphic nov-
els. In this context teachers have had to reexamine their
classroom practices

Journal of Adolescen t & Adul t L i teracy 5 2 (6)
March 2 0 0 9
doi:10 .15 9 8 /JA A L . 5 2 . 6 . 3
© 2 0 0 9 In ternat ional Reading A ssociat ion
(pp. 4 8 3 – 4 9 4)
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because of the increasing inf luence of technology on
students’ literacy practices. The problem is that

teachers...assume students already know all the “tech
stuff,” and need only to have their writing and think-
ing skills sharpened.... First, not all students have tech-
nological knowledge; second, even those who do have
it need to know how to manage these skills. (Collier,
2007, p. 5)
Bringing students’ out-of-school knowledge
and experiences into the classroom can help adoles-
cents meet in-school expectations (Hinchman et al.,
2003/2004) and can prepare them for the real-life
expectations they will encounter in the workplace
(Collier, 2007). Frey and Fisher (2004) and Schwarz
(2006) used students’ prior knowledge of popular cul-
ture, specifically graphic novels, to address deficiencies
they saw in students’ reading and writing. They found
that using graphic novels—bound books of stories in
comic form—was effective when teaching traditional
elements of high school English curriculum, specifi-
cally reading strategies such as making inferences and
understanding vocabulary in context and writing prac-
tices such as addressing a prompt and different audienc-
es and creating engaging leads (Frey & Fisher, 2004).
This article provides a description of a three-week,
campus-based summer literacy program that provided
opportunities for adolescents to develop multiple lit-
eracy skills. We, the university faculty working with
a group of high school students, sought to build upon
students’ interest in popular culture with traditional
academic tasks such as reading, writing, and conduct-
ing research to bridge the gap between adolescents’
in-school and out-of-school practices. We created a
curriculum to build upon the proficiencies we be-
lieved the students brought with them to the program

(e.g., technology skills and media literacy) to further
develop their literacy skills in other areas, namely
reading and writing. Although others have used com-
ic books as a strategy to engage students as readers
(Bitz, 2004), we sought to introduce the technology
component to merge all of these literacy practices to-
gether. We believed that if we used popular culture to
engage a group of 12 urban high school students in a
variety of multimedia projects, they would make con-
nections between reading, writing, and technology.
Description of the Context
and Participants
Four full-time faculty members, three of whom
wrote this article, immersed students in a three-week
exploration of graphic novels during the summer of
2007. The faculty included one literacy professor who
teaches in a masters reading program and two pro-
fessors who teach in a teacher education program for
candidates seeking secondary certification. One of
these faculty members is an urban education profes-
sor, and the other is an educational media and tech-
nology educator who teaches several online courses.
The fourth faculty member who worked in this sum-
mer program is a professor who teaches mathematical
methods courses.
The students who participated in the program
are members of the Paterson Teachers for Tomorrow
(PT4T) program, which is part of an urban, school–
community partnership with the university. PT4T
seeks to recruit, prepare, and support new teachers
who commit to return to the Paterson Public School
District once they complete their college education
and teacher certification. Each summer the high
school students participate in a three-week summer

program at the William Paterson University cam-
pus in northern New Jersey. A group of 12 African
American and Hispanic students participated in the
2007 summer program. In this article we use pseud-
onyms to refer to the participants.
The students participated in a series of two-hour
sessions each day: SAT Math Test Prep, Technology,
Reading, and Writing. This article focuses on the
multiple literacy practices that occurred during tech-
nology, reading, and writing sessions. The curriculum
we developed for the reading and writing sessions fa-
cilitated discussions about contemporary social issues
that we believe moved students closer to becoming
change agents in their communities. The activities
provided opportunities for students to examine and
discuss social issues in hopes of increasing their per-
ceptions of themselves as community leaders and
change agents. Ongoing ref lection during the three
weeks of the program helped us integrate the ele-
ment of social justice and grass roots with community
change throughout the curriculum.
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Components of the program were also strongly

inf luenced by research on popular culture, students’
in- and out-of-school literacy practices, and the dif-
ferences often evident in students’ literacy practices
as they code switched when communicating in dif-
ferent contexts and with different audiences (Ball,
1992, 1995, 1996; Cutler, 1999; Fisher, 2003; Frey &
Fisher, 2004; Hinchman et al., 2003/2004; Mahiri &
Sablo, 1996; Moje, 2000; Moje, Young, Readence, &
Moore, 2000). Taking a cue from the studies we re-
viewed, we chose several graphic novels for students
to read as common texts and for independent read-
ing. The common texts were Malcolm X: A Graphic
Biography by Andrew Helfer and Randy Duburke and
Persepolis 2: The Story of a Return by Marjane Satrapi.
While several outcomes were noted with regard to
students’ reading of graphic novels, this article focuses
on the impact made when we combined technology,
comics, and graphic novels and engaged students in
reading and writing activities. We distinguished com-
ics from graphic novels by noting that graphic novels
are “a longer and more artful version of the comic
book bound as a ‘real’ book” (Schwarz, 2006, p. 58)
that provide a means for exploring and developing
multiple literacies (Schwarz, 2006).
Data Collection and Analysis
Various artifacts, namely the students’ work, their
comments, our lesson plans, ref lective notes, and the
rubric we created to evaluate the students’ culminat-
ing project, were obtained from the summer program.
Students’ work consisted of their journal entries, re-
sponses to the texts they read, and their individual
and group projects. Students’ comments were ob-
tained through surveys and conferences with faculty.
Ref lective notes from faculty were obtained during
meetings, and periodic modifications were made to

the curriculum. For instance, we did not initially have
a rubric for students’ projects, so we decided to co-
create a rubric with the students as we introduced the
requirements of the project with them. This process
helped clarify expectations for the students.
We sought to examine the authentic practices of
the participants as they occurred throughout the pro-
gram. To this end, document and content analyses were
used to review the artifacts we collected “as objective
indicators of phenom-
ena to which they re-
fer, and [analyze] the
content of a document”
(Henn, Weinstein, &
Foard, 2006, p. 98).
Content analysis was
also used to chunk the
data (Wolcott, 2001).
We used the themes that
emerged as a way to gain
insights into the learn-
ing experiences and ac-
tivities that both faculty
and students engaged in
during the program.
Practices That Connect
Reading, Writing, and Technology
We (the faculty members) taught minilessons to
model reading, writing, and technology strategies.
These minilessons were presented in different set-
tings. Although each subject was taught indepen-
dently, we were each available for consultation or
to visit the classrooms. Subject-specific minilessons

(e.g., technology, reading comprehension, writing)
were incorporated into all three of our teaching ses-
sions and included strategies for comprehending visual
texts, writing comics, learning the research process,
and understanding technological basics such as how
to use a USB port as well as relevant technological
applications. Minilessons were taught in the class-
room because we had access to a console and projec-
tion screen where we could model various strategies
and tasks the students were expected to complete.
After each minilesson, the class went to the computer
lab where students had hands-on time working on
the activities introduced and demonstrated in class.
Students practiced using the strategies in groups and
independently. Some of the lessons included search-
ing for information on the Internet, deconstructing
commercials, writing an online book review, and
using reading strategies such as making connections
and asking questions. We used comics and excerpts
from graphic novels as shared texts to model read-
ing strategies through think-alouds (Wilhelm, 2001).
We did not initially
have a rubric for
students’ projects,
so we decided to
cocreate a rubric
with the students as
we introduced the

requirements of the
project with them.
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Minilessons also focused on discussing the impor-
tance of word choice, voice, and tone encountered in
text. We also asked students to write short pieces for
wordless comics (Frey & Fisher, 2004), such as writ-
ing captions and dialogues to change the tone and

voice of the text while matching visual elements in
the pictures. Short stories written in comic form se-
lected from Will Eisner’s New York: Life in the Big City
were also used as writing prompts.
During the reading sessions students participated
in silent reading, whole-group and small-group dis-
cussions about common texts (the graphic novels),
journal writing about both common and independent
texts, responding to reading through writing, one-on-
one conferencing between faculty and students, and
small-group activities to explore social issues discussed
in class and in the texts. The writing minilessons fo-
cused on writing for authentic purpose and real world
audiences. Students were shown how to distinguish
between narrative and informational texts. They were
also provided with opportunities to closely exam-
ine techniques used by the authors and illustrators of
the graphic novels they were reading independently.
We noted how the authors and illustrators used space
on the page and the panels to lay out the story using
images and different types of text. The writing ses-
sions also focused on informational writing, research,
and publishing writing using Microsoft Word and
PowerPoint, as well as conducting Internet research.
During the technology sessions, students used
Macintosh computers to learn about the Comic Life
Software by Plasq. Then they used the software to
create comics that combined visual images with the
text. Comic Life has a simple interface. This software
application can be used to create greeting cards, photo
albums, storybooks, instructional handouts and bro-
chures, storyboarding video projects, and comics or
graphic novels. The software provides students with
the opportunity to create their own comic in digi-

tal form. It also has options for creating comics with
different page layouts with boxes, images, and text.
There are many different filters, effects, word and
thought balloons, and templates that can be applied to
create different types of documents that turn texts and
images into comic form. For example, the students
selected and inserted various fonts and manipulated
the size of fonts and shapes of the images to choose the
visuals that best fit their project. As indicated in Table
1, the minilessons and in-class media literacy activities
sought to scaffold students through a learning process
in which they gradually became more proficient with
the software by completing different hands-on activi-
ties. To increase students’ proficiencies in media lit-
eracy, we taught lessons on deconstructing magazine
and television advertisements, as well as news stories.
Students had hands-on time working in two differ-
ent computer labs: one lab had Macintosh computers
loaded with Comic Life and the other had personal
computers (PCs) loaded with Microsoft Office. In the
PC lab, students used word-processing functions and
prepared PowerPoint presentations in which they re-
sponded to their individual texts.
During the program students were asked to create
four projects: an individual comic, a group research
project and informational comic strip, an individual
reader response project, and an individual book cri-
tique. The two projects created using Comic Life,
the individual comic and the group research project
and informational comic strip, were vastly different.
The former required that students write a comic strip
about themselves. Students created narratives about
their lives and used the software to produce a comic
version of the story. During lab time, students used

techniques learned from the book Understanding Comics
by Scott McCloud (1994) to explore concepts such as
templates for manga and graphic novels. The latter
project students created with Comic Life, the group
research project and informational comic strip, was
more comprehensive. To connect to the central theme
of community in the PT4T program, we believed
that a research project would provide opportunities
for students to develop their critical literacy while
increasing their awareness of issues relating to social
justice. These kinds of academic tasks promote critical
literacy because students were challenged to “make
use of literacy tools to navigate, resist, construct, and
reconstruct popular, academic, and work cultures”
(Moje et al., 2000, p. 211). In class, we brainstormed
several social problems facing their community today.
Some of the topics were gang violence, homelessness,
and hate crimes, to name a few. The students also dis-
cussed other issues that exist on a larger scale, namely
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digital camera. Some of the students drew their own
illustrations and scanned them into the computer.
Few of the students who used the digital camera

to take pictures for their project were familiar with
how to upload pictures to the computer. With guid-
ance from us, all of the students were able to success-
fully do this task by the third week. Because the few
students who owned computers did not have access to
Macintosh computers at home, and therefore had dif-
ficulty accessing and viewing their work, a minilesson
was taught on how to export their comics as HTML,
image, or QuickTime files and how to then e-mail
these files to themselves so that they could work on
the projects remotely if they had computers at home
and so that they could share the projects with a wider
audience. All of the students also printed hard copies
of their comics to share with the class during their
final presentation on the last day of the program.
While creating individual comic strips, the stu-
dents created title and speech bubbles in a variety of
global warming, human trafficking, and modern-day
slavery. It was expected that the informational comic
strip they created should inform or persuade their au-
dience to take action in response to the social problem
depicted in their text.
Using Technology to Facilitate
Students’ Creation of Text
We found that all of the students were engaged with
technology while completing their tasks. While
working with the Comic Life software, students

dragged and dropped various images onto the page to
digitally alter photos and graphics to look like comic
drawings. None of the students used the computer to
draw images. Most of the images students used were
downloaded from the Internet, pictures they had
saved on their USB drives, or pictures downloaded
from a personalized Flickr site, which was established
to store pictures students were taking in class using a
Table 1 Media, Information, and Technology Literacy
Activities That Occurred
During the Technology Workshop
Week Activities/topics
1
Preproduction
Day 1
Media literacy
dia images and advertisement

Day 2
Computer basics
time
2
Production
Day 1
Information literacy
(e.g.,
Google)
-on lab time
Day 2
Media production
roject

individual project
copies of the individual project
-on lab time
3
Postproduction
Work on group project during hands-on lab time
-on lab time
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styles. They experimented with elements of the comic
medium. Some students included speech bubbles out-
side of the frame and captions to provide the reader
with additional information about the story—these
elements are often seen in comics. Students seemed
excited to figure out the software and its capabilities—
they cut and pasted text and images, manipulated the
size and shapes of the layout, and shared new insights
with the group when they found a layout pattern that
enhanced the images and text they inserted. Other
students were able to add text and bubbles with relative
ease. We observed that this was often the first thing
they did when they started working on a comic tem-
plate. The students’ writing process consisted of iden-
tifying the pictures (either downloading photographs
from Flickr or inserting illustrations they created) and
including them in the comic template. Then students
wrote text to go along with the pictures. During con-
ferences with the instructor, students were questioned
and prompted to add more details, to rearrange text to
better connect to the images they inserted, or to find
a better image to connect with the text they wrote.
While writing, students used various literary devices
in their narrative such as dialogue, irony, and f lash-
back. To support the limited text in each comic, the
students also used transitional words, color, and set-
ting to show time change. The students also tested
how to alter their images and change them to comic
form, but most of them left their pictures unfiltered
in the final product.

For the culminating project students worked
in groups to conduct research and share what they
learned about their selected topic with a wider au-
dience via an informational comic. Students were
randomly assigned to groups ranging in size from
two to four members. Each group selected a topic—a
contemporary issue relating to social justice, which
they knew little about. Once a topic was chosen, the
groups researched this issue before creating their in-
formational comic about the topic. The students cre-
ated five- to six-panel comic strips using Comic Life
by synthesizing and summarizing information in the
form of texts and visuals that they obtained through
research.
Some modeling and guidance occurred in small
groups where we provided students with one-on-one
support. For example, when a group appeared to be
having difficulty obtaining sources in the computer
lab, one faculty member walked over to provide them
with assistance:
Faculty member: What are you guys doing?
Patricia: We have thoughts in our head, but
we want to see if there are other
options.
Faculty member: You want to combine pictures with
your artwork?
Patricia: We want to see if there are things
that would make the messages [in
their comic] stronger.

Faculty member: Have you looked at The New Yorker
website? They have pictures of the
environment or pollution. You can
check there. Make sure you write
that down as one of your sources.
We used the one-on-one and small-group confer-
ences for a variety of purposes:
1. Explaining how to complete tasks on the com-
puter (e.g., inserting pictures, cutting and past-
ing pictures into the Word document, changing
the size and color of font in their projects)
2. Brainstorming options for presenting their
work to the audience based on the type of text
they wanted to share (e.g., poem about the
character)
3. Modeling how to write and post an online
book review, how to search the Internet for in-
formation, and how to save to the USB drive
4. Providing students with suggestions and re-
search strategies to help them progress through
the writing process
5. Asking students questions to ascertain their
needs and then guiding them through their
projects
Students were frequently observed using tech-
niques that had been modeled by us during whole-class
minilessons. For example, while conducting research
in the computer lab for his group project, Brian was

overheard saying to his group member “She showed
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by making connections to their prior knowledge and
across texts (Gruber & Boreen, 2003).
Students Use Technology When
Responding to Text
We provided students with a list of reader response
options from which they could choose how to re-
spond to the graphic novel they read independently.
Some of the options included
1. Write and illustrate a poem
2. Write a critique of the book
3. Make text-to-text, text-to-self, and text-to-
world connections
For two weeks students worked on their read-
er response project, which required them to select
how they would respond to their independent read-
ing book, to complete the response, and to prepare

us Google.” He was referring to a minilesson where
one faculty member modeled how to narrow a search
using key terms through the advanced search op-
tion on the Google search engine. During one lesson
the students learned how to use the advanced search
option to distinguish between .com, .gov, .org, and
.net sites during the research process. The instruc-
tor showed students how to explore different search
engines for different purposes. She showed them how
to eliminate commercial sites by putting (–) minus in
front of “.com” or (+) in front of “.edu” to distinguish
between sites. This technique introduced students to
a strategy for refining the results that appear after an
initial search using a search engine. As the instruc-
tor modeled using the computer, she showed students
how to scan the results from a search to distinguish
government and nonprofit websites. She showed the
class different websites and talked about the credibil-
ity issues they might encounter with certain websites
(e.g., false or incomplete information, out-of-date
information).
A close look at students’ group projects docu-
ments students’ knowledge of the social issues they
explored and their ability to critically analyze text
when provided with the time to examine, research,
and discuss texts with peers (Moje, 2000). The stu-
dents created comics about pollution and global
warming, genocide, and modern-day slavery. Figure
1 is the culminating project produced by one group
of students, using Comic Life. These students were
interested in researching and raising awareness
in their readers about the topic of modern slavery.
Students researched this issue and then chose a few
key facts from their research to incorporate into this
comic. This group then linked their background

knowledge of slavery in the United States, prior to
the U.S. Civil War, to the issue of modern slavery.
They searched the Internet and found relevant pic-
tures to incorporate into their comic. We found that
by the third session (4.5 hours of work) this group had
researched and discussed the issue, obtained relevant
graphics, and completed a comic that demonstrated
their knowledge about the subject and connected it
to prior knowledge. We learned that students’ in-class
experiences led them to engage in more in-depth and
evaluative conversations of issues in the larger society
Figure 1 One Group’s Culminating Project
About Modern Slavery
Note. Images A, B, and F do not require copyright permission.
Images C, D,
and E are photography by cour tesy Shiho Fukada.
B
E
F
G
D
C
A
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In addition to using technology to enhance their
reader responses and creating both individual and
group comics, each student also wrote and uploaded
to the Barnes and Noble website a critique of one of
the graphic novels they read independently. As noted
above, we showed students where to upload their book
critiques onto the website. Despite the lessons taught
and comments students made to us about their dislike
of some of the books, we found that students only
wrote and submitted positive reviews of their inde-
pendent reading graphic novels; none of the students
wrote negative critiques. We observed this disparity

numerous times while working with the students.
For example, many students complained to us that
a presentation using PowerPoint. Students’ journals
revealed that the majority of the students were able
to produce concise and informative responses as the
sessions progressed, to incorporate dialogue into their
stories, and to expand their written vocabularies. Most
of the students responded to their reading by writing
songs and poetry. Students also used word processing
to produce final drafts of their responses. Several stu-
dents manipulated the font sizes and styles to convey
meaning or ideas in their response.
The students were required to present their read-
er responses to the class and had the option of using
PowerPoint. Figure 2 is an example of slides from one
student’s presentation of a poem that she wrote.
Figure 2 One Student’s Reader Response Presentation
• Wanting to do well for parents sake
• The need to fit in, to be accepted, a
change in pace
• A change in her face, problems create
anxiety
• And then every thing subsides and
there is peace.
Persepolis Poem
By CN

• Alone and confused out of place
• A foreign place, not the same
• A bitter sweet taste
• Lonely in a world confusing and over
bearing not at ease
• An outsider in a new place
• Small cramped space
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Natasha: Mine say Background [sic].
Oharia [pointing to the computer screen]: Click
this. Click this. OK. Click this one.
While showing Natasha how to change the back-
ground of her PowerPoint slide, Oharia didn’t realize
that she could click on the drop down menu to see
options for changing the background. When Natasha
opened the drop down window, Oharia moved her
chair over to Natasha’s computer and continued to
give directions by pointing to the screen.

By the end of the program, students developed
proficiency using various technology tools, such as
PowerPoint, Comic Life, and uploading as well as
downloading pictures. Many of the students were ob-
served multitasking while working on their projects.
They were observed visiting social networking sites
like MySpace and Facebook, checking e-mail, im-
porting pictures to Flickr, as well as visiting YouTube
and watching music videos. Students were observed
simultaneously talking to peers and working indepen-
dently on their PowerPoint presentations and typing
the final draft of their reader response in the word pro-
cessor or working on their group projects. Working
on all of these tasks simultaneously did not appear to
hinder their progress or concentration. During lab
times, students were engaged in their project while
helping one another with technology and sharing their
ideas. While working on the computer, students had
multiple screens open (i.e., one for search engine, one
for Comic Life, one for background music). In one
breath, the students sought examples and guidance for
their projects from peers, and in the next, they talked
about a video the rest of the group should look at on
YouTube. During the groups’ presentations of their
comics, all of the students effectively used technol-
ogy to present their work. For their final comics, they
overlaid text and pictures in the panels and used differ-
ent panel shapes. In addition, during the final presen-
tations we saw that most of the students incorporated
pictures, different colors and font sizes, different layout
designs and backgrounds, sound, and animation.
Discussion and Implications
Lattimer (2003) believed that teachers need to or-
ganize the curriculum to provide students with

they did not enjoy reading McCloud’s Understanding
Comics, but none of the students choose to critique
this text online. Similarly, one student spoke pas-
sionately about the book King, Volume 2 by Ho Che
Anderson, expressing his grave dissatisfaction with
the period of Martin Luther King’s life depicted in
the text. Although this student was encouraged to cri-
tique the book online, the student chose to submit a
favorable review of another book he read—Malcolm
X: A Graphic Biography—instead of the book he dis-
liked—King, Volume 2. It appears that the students
who spoke critically about several of the texts were
not confident enough about their own opinions to
write and upload to the Internet their negative views
of published works.
Students’ Knowledge of Technology
Our initial sessions in the computer labs revealed that
at least half of the students were not familiar with how
to use spell check in PowerPoint, and about the same
amount had difficulty changing font and spacing sen-
tences in Word. More than half of the students did not
know how to use PowerPoint past opening the appli-
cation and using black font on white background. The
majority of the students (8 out of 12) had difficulty
saving to a USB drive, and none of the students knew
how to use Excel.
We learned that 5 out of 12 students had comput-
ers at home. One student who did not have a computer
at home indicated that she goes to her friend’s house to
use the computer. Only 2 of the 12 students, who were
seniors in high school, said they had taken technology
classes in school. From the inception, we saw that there
were some students who were more proficient with
the technology than others. We also observed that the

more proficient students often helped less technology-
literate students prepare their PowerPoint slides and
search for online images and music to enhance their
presentations. Below is an interaction documenting
how one student, Oharia, helped a less proficient stu-
dent, Natasha, while they each worked on their re-
spective PowerPoint projects in the lab.
Oharia: OK. Go here to Format and click on
Background. Mine don’t say Background
[sic].
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students bring a vast knowledge of technological lit-
eracy, and teachers can tap into them as a resource
in the classroom. Students in our summer program
who were knowledgeable about comics and graphic
novels as well as technology were used as resources in
the class to help those students who were less profi-
cient in those areas. Students who previously had little
knowledge of graphic novels became more interested
in reading graphic novels and comics about different
people and topics because of the visual composition of
these texts. Similarly, the students were motivated to
complete innovative computer-based tasks.
We were surprised to see that most of the students
struggled with what we perceived to be basic tech-
nology skills such as changing fonts, uploading pic-
tures, using USB drives, and using different software,
namely PowerPoint. The culminating project we as-
signed was an important part of the students’ multiple
literacy development. With support from peers and us
during the three-week program, all students demon-
strated improvement in informational literacy. While
conducting research for their culminating project—
the informational comic about a social issue—students
further developed their research skills. The process we
used for this project can be a blueprint for secondary
teachers who want to engage students in conducting
meaningful research. Specifically, teachers should ask
students to
1. Select research topics, issues, or problems with
social significance

2. Use a variety of online sources to learn about
the issue and, if applicable, identify solutions to
this problem
3. Summarize and synthesize the information
they gather via research
4. Identify an audience with whom to share their
research
5. Create informational text and visuals to share
with a wider audience using a nontraditional
format (e.g., comic)
We recognize that facilitating activities similar
to those we used in our summer program might be
difficult for some teachers who have limited experi-
ences with technology. This should not deter teachers
opportunities to interact
with a wide variety of
texts and that students
need opportunities to
produce their own text.
The curriculum we cre-
ated for our summer
program helped us see
the benefits of provid-
ing students with the
opportunity to produce
their own text when
using technology. Our
students were able to
increase their understanding of communicating with
texts and visuals, develop their writing by synthesiz-

ing informational text, and increase their knowledge
of technology. Connecting reading, writing, visual,
and technological literacy provided students with op-
portunities to write for wider audiences and to pro-
duce authentic texts such as online book reviews.
Cambourne (2002) talked about the importance
of immersing learners in environments that support
their literacy development. Biancarosa and Snow
(2003, 2004) believed that learning experiences of
students should include opportunities that help stu-
dents see connections between topics and help them
make connections to the real world. When imple-
menting a curriculum, secondary teachers can select
materials and media resources to teach media literacy
and provide opportunities for students to produce
their own media by immersing students in learn-
ing environments that facilitate their understanding
of text and visuals. Integrating a variety of materials
and instructional approaches provides teachers with
the opportunity to better meet the needs of students
through interdisciplinary connections, which pre-
vious research as well as this research project dem-
onstrates are meaningful to adolescent learners by
connecting to their prior knowledge and experiences
outside of school. Additionally, secondary teachers
can ask students to work in groups to complete proj-
ects that connect reading, writing, visual, media, and
technological literacies
We believe that teachers should use students’ pri-
or knowledge and familiarity with popular culture to
teach reading and writing (Frey & Fisher, 2004). Some
The curriculum
we created for our

summer program
helped us see the
benefits of providing
students with the
opportunity to
produce their own
text when using
technology.
493
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from trying because there are a few things they can
do to begin incorporating technology into the cur-
riculum. Collier (2007) suggested that teachers can
help “students thrive in the world of 21st-century
literacy...[by becoming] f luent in the language of
newer technologies” (p. 4). Additionally, to facilitate
meaningful experiences that merge technology with
reading and writing, “teachers...need to develop three
dimensions of knowledge” ( Jones & Moreland, 2004,
p. 123)—knowledge about technology as a content
area, knowledge in technology, and knowledge about
teaching technology. This knowledge of teaching

technology also requires that teachers are aware of the
teaching and learning process so they understand “stu-
dents learn more effectively when the teacher struc-
tures new information, [by] relating it to [their] prior
knowledge, monitoring the learning and providing
effective feedback” to students ( Jones & Moreland,
2004, p. 124). We found that our students were able
to increase their experiences with technology after
listening to minilessons, attending conferencing ses-
sions, and drawing on the support from peers who
were more proficient in technology.
Although some educators may be reluctant to
promote the incorporation of graphic novels comic
creation into their curriculum (Méndez, 2004), Potter
(1998) argued that it is important to provide students
with tools to produce their own media. We believe
that by incorporating new literacies into our curricu-
lum we effectively created activities for students to
read and write for enjoyment, further develop infor-
mation literacy and research skills such as summariz-
ing and synthesizing information from a variety of
sources, and increase students’ awareness of audience
by creating their own informational text.
In contrast, using technology to produce their
own reader responses did little to increase students’
ability and willingness to critique the texts. Future
research should explore how secondary English lan-
guage arts teachers can help adolescents develop criti-
cal literacy by using alternative forms of nontraditional
texts. These studies should document the extent to
which students engage in critical literacy practices and
their perceptions of these acts and the extent to which
classroom contexts facilitate or hinder adolescents’
critical literacy practices.

Re f er ence s
Ball, A.F. (1992). Cultural preference and the expository
writing
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Biancarosa, G., & Snow, C. (2003). Adolescent literacy and the
achievement gap: What do we know and where do we go from
here?
New York: Carnegie Corporation of New York. Retrieved
November 1, 20 04, f rom w w w.a l l4ed.org/resources/
CarnegieAdolescentLiteracyReport.pdf
Biancarosa, G., & Snow, C. (2004). Reading next—A vision for
action and research in middle and high school literacy: A report
to
Carnegie Corporation of New York. Washington, DC: Alliance
for Excellent Education.
Bitz, M. (2004). The comic book project: Forging alternative
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reading
and language arts instruction: The constructivist framework

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(Eds.), What research has to say about reading instruction (pp.
25–
47). Newark, DE: International Reading Association.
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Chronicle, 17(2), 4–8.
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3(4),
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ties. Harvard Educational Review, 73(3), 362–389.
Frey, N., & Fisher, D. (2004). Using graphic novels, anime, and
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Gruber, S., & Boreen, J. (2003). Teaching critical thinking:
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introduction
to social research. London: Sage.
Hinchman, K.A., Alvermann, D.E., Boyd, F.B., Brozo, W.G., &
Vacca, R.T. (2003/2004). Supporting older students’ in- and
out-of-school literacies. Journal of Adolescent & Adult

Literacy,
47(4), 304–310.
Jones, A., & Moreland, J. (2004). Enhancing practicing primary
school teachers’ pedagogical content knowledge in technol-
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14(2), 121–140. doi:10.1023/B:ITDE.0000026513.48316.39
King, J., & O’Brien, D. (2002). Adolescents’ multiple literacies
and their teachers’ needs to know: Toward a digital détente.
In D.E. Alvermann (Ed.), Adolescents and literacies in a digital
world (pp. 40–50). New York: Peter Lang.
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reading
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York: HarperCollins.
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Lawrence teaches at William Paterson University, Wayne,
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McNeal teaches at William Paterson University; e-mail
[email protected] teaches at William Paterson
University; e-mail [email protected]

Net Present Value: First Principles of Finance
Appendix 4A
Copyright © 2013 by the McGraw-Hill Companies, Inc. All
rights reserved.
McGraw-Hill/Irwin
*
4A-*
Key Concepts and SkillsUnderstand the theoretical foundations
of the Net Present Value (NPV) rule
*
4A-*
Appendix Outline
4A.1 Making Consumption Choices over Time
4A.2 Making Investment Choices
4A.3 Illustrating the Investment Decision
*
4A-*
Making Consumption Choices over TimeAn individual can alter

his consumption across time periods through borrowing and
lending.We can illustrate this by graphing consumption today
versus consumption in the future.This graph will show
intertemporal consumption opportunities.
*
4A-*
Intertemporal Consumption Opportunity Set
A person with $95,000 who faces a 10% interest rate has the
following opportunity set.
One choice available is to consume $40,000 now; invest the
remaining $55,000; consume $60,500 next year.
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Consumption today

$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Consumption at t+1
*
4A-*
Intertemporal Consumption Opportunity Set
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$0
$20,000
$40,000
$60,000
$80,000
$100,000

$120,000
Consumption today
Consumption at t+1
Another choice available is to consume $60,000 now; invest the
remaining $35,000; consume $38,500 next year.
*
4A-*
Taking Advantage of Our Opportunities
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Consumption today
Consumption at t+1
A person’s preferences will determine what point on the

opportunity set she will choose.
Ms. Patience
Ms. Impatience
*
4A-*
Changing Our Opportunities
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Consumption today
Consumption at t+1
A rise in interest rates will make saving more attractive …
…and borrowing less attractive.

Consider an investor who has chosen to consume $40,000 now
and to consume $60,000 next year.
*
The point at which the intertemporal opportunity set pivots
depends upon where your endowment is when interest rates
change. If the person had $95,000 in current consumption and
no future consumption, the pivot would have been at the x-axis
intercept.
4A-*
Illustrating the Investment DecisionConsider an investor who
has an initial endowment of income of $40,000 this year and
$55,000 next year.Suppose that she faces a 10-percent interest
rate and is offered the following investment.
Cash inflows
Time
Cash outflows
0
1
-$25,000
$30,000
*
4A-*

Illustrating the Investment Decision
$0
Consumption today
Our investor begins with the following opportunity set:
endowment of $40,000 today, $55,000 next year and a 10%
interest rate.
One choice available is to consume $15,000 now; invest the
remaining $25,000 in the financial markets at 10%; consume
$82,500 next year.
$0
$99,000
Consumption at t+1
$90,000
$55,000
$82,500
$40,000
$15,000
*
4A-*
$0

Consumption today
A better alternative would be to invest in the project instead of
the financial markets.
She could consume $15,000 now; invest the remaining $25,000
in the project at 20%; consume $85,000 next year.
$0
$99,000
Consumption at t+1
$90,000
$55,000
$82,500
$40,000
$85,000
$15,000
With borrowing or lending in the financial markets, she can
achieve any pattern of cash flows she wants—any of which is
better than her original opportunities.
*

4A-*
$0
Consumption today
Note that we are better off in that we can command more
consumption today or next year.
$0
$99,000
Consumption at t+1
$101,500
$101,500 = $15,000×(1.10) + $85,000
$90,000
$92,273
$55,000
$82,500
$40,000
$85,000
$15,000
$92,273 = $15,000 +

*
4A-*
Net Present ValueThe value created by the investment
opportunity increased our possible consumption.This
opportunity, therefore, created value.The current value of the
opportunity is the investment’s NPV.
*
4A-*
Quick QuizWhat factors determine our consumption next
year?How do investment opportunities create value?
*
1
1
)
10
.
1
(
000
,
85

$
Discounted Cash Flow Valuation
Chapter 4
Copyright © 2013 by the McGraw-Hill Companies, Inc. All
rights reserved.
McGraw-Hill/Irwin
*
4-*
Key Concepts and SkillsBe able to compute the future value
and/or present value of a single cash flow or series of cash
flowsBe able to compute the return on an investmentBe able to
use a financial calculator and/or spreadsheet to solve time value
problemsUnderstand perpetuities and annuities
*
4-*
Chapter Outline
4.1 Valuation: The One-Period Case
4.2 The Multiperiod Case
4.3 Compounding Periods

4.4 Simplifications
4.5 Loan Amortization
4.6 What Is a Firm Worth?
*
4-*
4.1 The One-Period CaseIf you were to invest $10,000 at 5-
percent interest for one year, your investment would grow to
$10,500.
$500 would be interest ($10,000 × .05)
$10,000 is the principal repayment ($10,000 × 1)
$10,500 is the total due. It can be calculated as:
$10,500 = $10,000×(1.05)
The total amount due at the end of the investment is call the
Future Value (FV).
*
4-*
Future ValueIn the one-period case, the formula for FV can be
written as:
FV = C0×(1 + r)
Where C0 is cash flow today (time zero), and

r is the appropriate interest rate.
*
It may be helpful to identify r as the opportunity cost.
4-*
Present ValueIf you were to be promised $10,000 due in one
year when interest rates are 5-percent, your investment would
be worth $9,523.81 in today’s dollars.
The amount that a borrower would need to set aside today to be
able to meet the promised payment of $10,000 in one year is
called the Present Value (PV).
Note that $10,000 = $9,523.81×(1.05).
*
4-*
Present ValueIn the one-period case, the formula for PV can be
written as:
Where C1 is cash flow at date 1, and
r is the appropriate interest rate.
*

4-*
Net Present ValueThe Net Present Value (NPV) of an
investment is the present value of the expected cash flows, less
the cost of the investment.Suppose an investment that promises
to pay $10,000 in one year is offered for sale for $9,500. Your
interest rate is 5%. Should you buy?
*
4-*
Net Present Value
The present value of the cash inflow is greater
than the cost. In other words, the Net Present
Value is positive, so the investment should be
purchased.
*
4-*
Net Present Value
In the one-period case, the formula for NPV can be written as:
NPV = –Cost + PV
If we had not undertaken the positive NPV project considered
on the last slide, and instead invested our $9,500 elsewhere at 5
percent, our FV would be less than the $10,000 the investment
promised, and we would be worse off in FV terms :

$9,500×(1.05) = $9,975 < $10,000
*
4-*
4.2 The Multiperiod CaseThe general formula for the future
value of an investment over many periods can be written as:
FV = C0×(1 + r)T
Where
C0 is cash flow at date 0,
r is the appropriate interest rate, and
T is the number of periods over which the cash is invested.
*
4-*
Future ValueSuppose a stock currently pays a dividend of
$1.10, which is expected to grow at 40% per year for the next
five years.What will the dividend be in five years?
FV = C0×(1 + r)T
$5.92 = $1.10×(1.40)5
*

4-*
Future Value and CompoundingNotice that the dividend in year
five, $5.92, is considerably higher than the sum of the original
dividend plus five increases of 40-percent on the original $1.10
dividend:
$5.92 > $1.10 + 5×[$1.10×.40] = $3.30
This is due to compounding.
*
4-*
Future Value and Compounding
0
1
2
3
4
5

*
4-*
Present Value and DiscountingHow much would an investor
have to set aside today in order to have $20,000 five years from
now if the current rate is 15%?
$20,000
PV
0
1
2
3
4
5
*

4-*
4.5 Finding the Number of Periods
If we deposit $5,000 today in an account paying 10%, how long
does it take to grow to $10,000?
*
It may be good at this point to discuss the difficulty of
calculating time periods and interest rates, particularly without
the help of a financial calculator.
Rule of 72 says that 72/r gives an estimate of the number of
periods it will take something (e.g., an investment) to double.
4-*
Assume the total cost of a college education will be $50,000
when your child enters college in 12 years. You have $5,000 to
invest today. What rate of interest must you earn on your
investment to cover the cost of your child’s education?
What Rate Is Enough?
About 21.15%.
*

4-*
Calculator KeysTexas Instruments BA-II PlusFV = future
valuePV = present valueI/Y = periodic interest rateP/Y must
equal 1 for the I/Y to be the periodic rateInterest is entered as a
percent, not a decimalN = number of periodsRemember to clear
the registers (CLR TVM) after each problemOther calculators
are similar in format
*
We are providing information on the Texas Instruments BA-II
Plus – other calculators are similar. We choose this calculator
since it is one that is allowable for use in taking the CFA exam
and TI provides a simulator software that can be used in class.
If you recommend or require a specific calculator other than
this one, you may want to make the appropriate changes.
Note: the more information students have to remember to enter,
the more likely they are to make a mistake. For this reason, I
normally tell my students to set P/Y = 1 and leave it that way.
Then I teach them to work on a period basis, which is consistent
with using the formulas. If you want them to use the P/Y
function, remind them that they will need to set it every time
they work a new problem and that CLR TVM does not affect
P/Y.
If students are having difficulty getting the correct answer,
make sure they have done the following:Set decimal places to
floating point (2nd Format, Dec = 9 enter) or show 4 to 5

decimal places if using and HPDouble check and make sure P/Y
= 1Make sure to clear the TVM registers after finishing a
problem (or before starting a problem). It is important to point
out that CLR TVM clears the FV, PV, N, I/Y and PMT registers.
C/CE and CLR Work DO NOT affect the TVM keys.
4-*
Multiple Cash Flows Consider an investment that pays $200
one year from now, with cash flows increasing by $200 per year
through year 4. If the interest rate is 12%, what is the present
value of this stream of cash flows?If the issuer offers this
investment for $1,500, should you purchase it?
*
4-*
Multiple Cash Flows
Present Value < Cost → Do Not Purchase
0
1
2
3
4
200

400
600
800
178.57
318.88
427.07
508.41
1,432.93
*
4-*
Valuing “Lumpy” Cash Flows
First, set your calculator to 1 payment per year.
Then, use the cash flow menu:
CF2
CF1
F2
F1
CF0
1
200
1

1,432.93
0
400
I
NPV
12
CF4
CF3
F4
F3
1
600
1
800
*
4-*
4.3 Compounding Periods
Compounding an investment m times a year for T years provides
for future value of wealth:
*
4-*
Compounding Periods
For example, if you invest $50 for 3 years at 12% compounded

semi-annually, your investment will grow to:
*
4-*
Effective Annual Rates of Interest
A reasonable question to ask in the above example is “what is
the effective annual rate of interest on that investment?”
The Effective Annual Rate (EAR) of interest is the annual rate
that would give us the same end-of-investment wealth after 3
years:
*
4-*
Effective Annual Rates of Interest
So, investing at 12.36% compounded annually is the same as
investing at 12% compounded semi-annually.
*

4-*
Effective Annual Rates of InterestFind the Effective Annual
Rate (EAR) of an 18% APR loan that is compounded
monthly.What we have is a loan with a monthly interest rate
rate of 1½%.This is equivalent to a loan with an annual interest
rate of 19.56%.
*
4-*
EAR on a Financial Calculator
Texas Instruments BAII Plus
keys:
description:
[2nd] [ICONV]
Opens interest rate conversion menu
[↓] [EFF=] [CPT]
19.56
[↓][NOM=] 18 [ENTER]
Sets 18 APR.
[↑] [C/Y=] 12 [ENTER]
Sets 12 payments per year
*

4-*
Continuous CompoundingThe general formula for the future
value of an investment compounded continuously over many
periods can be written as:
FV = C0×erT
Where
C0 is cash flow at date 0,
r is the stated annual interest rate,
T is the number of years, and
e is a transcendental number approximately equal to 2.718. ex
is a key on your calculator.
*
e is a transcendental number because it transcends the real
numbers.
4-*
4.4 SimplificationsPerpetuityA constant stream of cash flows
that lasts foreverGrowing perpetuityA stream of cash flows that
grows at a constant rate foreverAnnuityA stream of constant
cash flows that lasts for a fixed number of periodsGrowing
annuityA stream of cash flows that grows at a constant rate for
a fixed number of periods
*

4-*
Perpetuity
A constant stream of cash flows that lasts forever
…
0
1
C
2
C
3
C
*
4-*
Perpetuity: Example
What is the value of a British consol that promises to pay
£15 every year for ever?
The interest rate is 10-percent.
…
0
1
£15

2
£15
3
£15
*
4-*
Growing Perpetuity
A growing stream of cash flows that lasts forever
…
0
1
C
2
C×(1+g)
3
C ×(1+g)2
*

4-*
Growing Perpetuity: Example
The expected dividend next year is $1.30, and dividends
are expected to grow at 5% forever.
If the discount rate is 10%, what is the value of this
promised dividend stream?
…
0
1
$1.30
2
$1.30×(1.05)
3
$1.30 ×(1.05)2
*
It is important to note to students that in this example the year 1
cash flow was given. If the current dividend were $1.30, then
we would need to multiply it by one plus the growth rate to
estimate the year 1 cash flow.
4-*
Annuity
A constant stream of cash flows with a fixed maturity
0

1
C
2
C
3
C
T
C
*
4-*
Annuity: Example
If you can afford a $400 monthly car payment, how much car
can you afford if interest rates are 7% on 36-month loans?
0
1
$400
2
$400
3

$400
36
$400
*
4-*
What is the present value of a four-year annuity of
$100 per year that makes its first payment two years from today
if the discount rate is 9%?
0 1 2 3 4 5
$100 $100 $100 $100
$323.97
$297.22
4-*
*
Ordinary Annuity vs. Annuity Due: It should be emphasized that
annuity factor tables (and the annuity factors in the formulas)
assumes that the first payment occurs one period from the
present, with the final payment at the end of the annuity’s life.
If the first payment occurs at the beginning of the period, then

FV’s have one additional period for compounding and PV’s
have one less period to be discounted. Consequently, you can
multiply both the future value and the present value by (1 + r)
to account for the change in timing. The values can also be
computed directly by changing the setting in the financial
calculator.
4-*
Growing Annuity
A growing stream of cash flows with a fixed maturity
0
1
C
2
C×(1+g)
3
C ×(1+g)2
T
C×(1+g)T-1
*

4-*
Growing Annuity: Example
A defined-benefit retirement plan offers to pay $20,000 per year
for 40 years and increase the annual payment by 3% each year.
What is the present value at retirement if the discount rate is
10%?
0
1
$20,000
2
$20,000×(1.03)
40
$20,000×(1.03)39
*
4-*
Growing Annuity: Example
You are evaluating an income generating property. Net rent is
received at the end of each year. The first year's rent is
expected to be $8,500, and rent is expected to increase 7% each
year. What is the present value of the estimated income stream

over the first 5 years if the discount rate is 12%?
$34,706.26
0 1 2 3 4 5
*
4-*
4.5 Loan AmortizationPure Discount Loans are the simplest
form of loan. The borrower receives money today and repays a
single lump sum (principal and interest) at a future
time.Interest-Only Loans require an interest payment each
period, with full principal due at maturity.Amortized Loans
require repayment of principal over time, in addition to required
interest.

*
4-*
Pure Discount LoansTreasury bills are excellent examples of
pure discount loans. The principal amount is repaid at some
future date, without any periodic interest payments.If a T-bill
promises to repay $10,000 in 12 months and the market interest
rate is 7 percent, how much will the bill sell for in the
market?PV = 10,000 / 1.07 = 9,345.79
*
Remind students that the value of an investment is the present
value of expected future cash flows.
1 N; 10,000 FV; 7 I/Y; CPT PV = -9,345.79
4-*
Interest-Only LoanConsider a 5-year, interest-only loan with a
7% interest rate. The principal amount is $10,000. Interest is
paid annually.What would the stream of cash flows be?Years 1
– 4: Interest payments of .07(10,000) = 700Year 5: Interest +
principal = 10,700This cash flow stream is similar to the cash
flows on corporate bonds, and we will talk about them in
greater detail later.
*

4-*
Amortized Loan with Fixed Principal PaymentConsider a
$50,000, 10 year loan at 8% interest. The loan agreement
requires the firm to pay $5,000 in principal each year plus
interest for that year.Click on the Excel icon to see the
amortization table
*
Sheet1YearBeginning BalanceInterest PaymentPrincipal
PaymentTotal PaymentEnding
Balance150,0004,0005,0009,00045,000245,0003,6005,0008,600
40,000340,0003,2005,0008,20035,000435,0002,8005,0007,8003
0,000530,0002,4005,0007,40025,000625,0002,0005,0007,00020
,000720,0001,6005,0006,60015,000815,0001,2005,0006,20010,
000910,0008005,0005,8005,000105,0004005,0005,4000
4-*
Amortized Loan with Fixed PaymentEach payment covers the
interest expense plus reduces principalConsider a 4 year loan
with annual payments. The interest rate is 8% ,and the principal
amount is $5,000.What is the annual payment?4 N8 I/Y5,000
PVCPT PMT = -1,509.60Click on the Excel icon to see the
amortization table
*
Sheet1YearBeginning BalanceTotal PaymentInterest

PaidPrincipal PaidEnding
Balance15,000.001,509.60400.001,109.603,890.4023,890.401,5
09.60311.231,198.372,692.0332,692.031,509.60215.361,294.24
1,397.7941,397.791,509.60111.821,397.780.01Totals6,038.401,
038.414,999.99Note: The ending balance of .01 is due to
rounding. The last payment would actually be 1,509.61.
4-*
4.6 What Is a Firm Worth?Conceptually, a firm should be worth
the present value of the firm’s cash flows.The tricky part is
determining the size, timing, and risk of those cash flows.
*
4-*
Quick QuizHow is the future value of a single cash flow
computed?How is the present value of a series of cash flows
computed.What is the Net Present Value of an investment?What
is an EAR, and how is it computed?What is a perpetuity? An
annuity?
*
05.1
000,10$
r
C
PV

1
1
81.23$
81.523,9$500,9$
05.1
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500,9$
NPV
NPV
NPV
10.1$
4
23.4$
5
92.5$
2
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54.1$
3
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5
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000,20$
T
rCFV )1(

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40

Financial Statements Analysis and Financial Models
Chapter 3
*
3-*
Key Concepts and SkillsKnow how to standardize financial
statements for comparison purposesKnow how to compute and
interpret important financial ratiosBe able to develop a financial
plan using the percentage of sales approachUnderstand how
capital structure and dividend policies affect a firm’s ability to
grow
*
3-*
Chapter Outline
3.1 Financial Statements Analysis
3.2 Ratio Analysis
3.3 The DuPont Identity
3.4 Financial Models
3.5 External Financing and Growth
3.6 Some Caveats Regarding Financial Planning Models
*

3-*
3.1 Financial Statements AnalysisCommon-Size Balance
SheetsCompute all accounts as a percent of total
assetsCommon-Size Income StatementsCompute all line items
as a percent of salesStandardized statements make it easier to
compare financial information, particularly as the company
grows.They are also useful for comparing companies of
different sizes, particularly within the same industry.
*
3-*
3.2 Ratio AnalysisRatios also allow for better comparison
through time or between companies.As we look at each ratio,
ask yourself:How is the ratio computed?What is the ratio trying
to measure and why?What is the unit of measurement?What
does the value indicate?How can we improve the company’s
ratio?
*
3-*
Categories of Financial RatiosShort-term solvency or liquidity
ratiosLong-term solvency or financial leverage ratiosAsset
management or turnover ratiosProfitability ratiosMarket value
ratios

*
The ratios in the following slides will be computed using the
2012 information from the Balance Sheet (Table 3.1) and
Income Statement (Table 3.4) given in the text.
3-*
Computing Liquidity RatiosCurrent Ratio = CA / CL708 / 540 =
1.31 timesQuick Ratio = (CA – Inventory) / CL(708 - 422) / 540
= .53 timesCash Ratio = Cash / CL98 / 540 = .18 times
*
The firm is able to cover current liabilities with it’s current
assets by a factor of 1.3 to 1. The ratio should be compared to
the industry – it’s possible that this industry has a substantial
amount of cash flow and that they can meet their current
liabilities out of cash flow instead of relying solely on the
liquidation of current assets that are on the books.
The quick ratio is quite a bit lower than the current ratio, so
inventory seems to be an important component of current assets.
This company carries a low cash balance. This may be an
indication that they are aggressively investing in assets that will
provide higher returns. We need to make sure that we have
enough cash to meet our obligations, but too much cash reduces
the return earned by the company.
3-*
Computing Leverage RatiosTotal Debt Ratio = (TA – TE) /

TA(3588 - 2591) / 3588 = 28%Debt/Equity = TD / TE(3588 –
2591) / 2591 = 38.5%Equity Multiplier = TA / TE = 1 + D/E1 +
.385 = 1.385
*
Note that these are often called solvency ratios.
TE = total equity, and TA = total assets. The numerator in the
total debt ratio could also be found by adding all of the current
and long-term liabilities.
The firm finances approximately 28% of its assets with debt.
Another way to compute the D/E ratio if you already have the
total debt ratio:
D/E = Total debt ratio / (1 – total debt ratio) = .28 / .72 = .39
Note the rounding error as compared to the direct method
applied in the slide.
The EM is one of the ratios that is used in the Du Pont Identity
as a measure of the firm’s financial leverage.
3-*
Computing Coverage RatiosTimes Interest Earned = EBIT /
Interest691 / 141 = 4.9 timesCash Coverage = (EBIT +
Depreciation + Amortization) / Interest(691 + 276) / 141 = 6.9
times
*
Remember that depreciation (and amortization) is a non-cash
deduction. A better indication of a firm’s ability to meet
interest payments may be to add back the depreciation and

amortization to get an estimate of cash flow before taxes.
You can also calculate a type of inverse value as follows:
Interest Bearing Debt / EBITDA = (196 + 457) / 967 = .68
Values less than one are indicative of a stable position.
3-*
Computing Inventory RatiosInventory Turnover = Cost of
Goods Sold / Inventory1344 / 422 = 3.2 timesDays’ Sales in
Inventory = 365 / Inventory Turnover365 / 3.2 = 114 days
*
Inventory turnover can be computed using either ending
inventory or average inventory when you have both beginning
and ending figures. It is important to be consistent with
whatever benchmark you are using to analyze the company’s
strengths or weaknesses.
It is also important to consider seasonality in sales. If the
balance sheet is prepared at a time when there is a large
inventory build-up to meet seasonal demand, then the inventory
turnover will be understated and you might believe that the
company is not performing as well as it is. On the other hand, if
the balance sheet is prepared when inventory has been drawn
down due to seasonal sales, then the inventory turnover would
be overstated and the company may appear to be doing better
than it really is. Averages using annual data may not fix this
problem. If a company has seasonal sales, you may want to look
at quarterly averages to get a better indication of turnover.
3-*

Computing Receivables RatiosReceivables Turnover = Sales /
Accounts Receivable2311 / 188 = 12.3 timesDays’ Sales in
Receivables = 365 / Receivables Turnover365 / 12.3 = 30 days
*
Technically, the sales figure should be credit sales. This is often
difficult to determine from the income statements provided in
annual reports. If you use total sales instead of credit sales, you
will overstate your turnover level. You need to recognize this
bias when credit sales are unavailable, particularly if a large
portion of the sales are cash sales.
As with inventory turnover, you can use either ending
receivables or an average of beginning and ending.
You also run into the same seasonal issues as discussed with
inventory.
Probably the best benchmark for days’ sales in receivables is
the company’s credit terms. If the company offers a discount
(1/10 net 30), then you would like to see days’ sales in
receivables less than 30. If the company does not offer a
discount (net 30), then you would like to see days’ sales in
receivables close to the net terms. If days’ sales in receivables
is substantially larger than the net terms, then you first need to
look for biases, such as seasonality in sales. If this does not
provide an explanation for the difference, then the company
may need to take another look at its credit policy (who it grants
credit to and its collection procedures).
3-*
Computing Total Asset TurnoverTotal Asset Turnover = Sales /
Total Assets2311 / 3588 = .64 timesIt is not unusual for TAT <

1, especially if a firm has a large amount of fixed assets.
*
Having a TAT of less than one is not a problem for most firms.
Fixed assets are expensive and are meant to provide sales over a
long period of time. This is why the matching principle
indicates that they should be depreciated instead of immediately
expensed.
This is one of the ratios that will be used in the Du Pont
identity.
3-*
Computing Profitability MeasuresProfit Margin = Net Income /
Sales363 / 2311 = 15.7%Return on Assets (ROA) = Net Income
/ Total Assets363 / 3588 = 10.1%Return on Equity (ROE) = Net
Income / Total Equity363 / 2591 = 14.0%EBITDA Margin =
EBITDA / Sales967 / 2311 = 41.8%
*
You can also compute the gross profit margin and the operating
profit margin.
GPM = (Sales – COGS) / Sales
OPM = EBIT / Sales
Profit margin is one of the components of the Du Pont identity
and is a measure of operating efficiency. It measures how well
the firm controls the costs required to generate the revenues. It
tells how much the firm earns for every dollar in sales. In the
example, the firm earns almost $0.16 for each dollar in sales.
Note that the ROA and ROE are returns on accounting numbers.

As such, they are not directly comparable with returns found in
the marketplace. ROA is sometimes referred to as ROI (return
on investment). As with many of the ratios, there are variations
in how they can be computed. The most important thing is to
make sure that you are computing them the same way as the
benchmark you are using.
ROE will always be higher than ROA as long as the firm has
debt (and ROA is positive). The greater the leverage, the larger
the difference will be. ROE is often used as a measure of how
well management is attaining the goal of owner wealth
maximization. The Du Pont identity is used to identify factors
that affect the ROE.
3-*
Computing Market Value MeasuresMarket Capitalization = $88
per share x 33 million shares = 2904 millionPE Ratio = Price
per share / Earnings per share88 / 11 = 8 timesMarket-to-book
ratio = market value per share / book value per share88 / (2591 /
33) = 1.12 timesEnterprise Value (EV) = Market capitalization
+ Market value of interest bearing debt – cash2904 + (196 +
457) – 98 = 3465EV Multiple = EV / EBITDA3465 / 967 = 3.6
times
*
See Table 3.6, as well as the instructor’s manual (chapter 3
appendix), for a summary list of financial ratios.
3-*
Using Financial StatementsRatios are not very helpful by
themselves: they need to be compared to somethingTime-Trend

AnalysisUsed to see how the firm’s performance is changing
through timePeer Group AnalysisCompare to similar companies
or within industriesSIC and NAICS codes
*
SIC codes have been used many years to identify industries and
allow for comparison with industry average ratios. The SIC
codes are limited, however, and have not kept pace with a
rapidly changing environment. Consequently, the North
American Industry Classification System was introduced in
1997 to alleviate some of the problems with SIC codes.
Click on the web surfer to go the NAICS home page. It provides
information on the change to the NAICS and conversion
between SIC and NAICS codes.
3-*
3.3 The DuPont IdentityROE = NI / TEMultiply by 1 and then
rearrange:ROE = (NI / TE) (TA / TA)ROE = (NI / TA) (TA /
TE) = ROA * EMMultiply by 1 again and then rearrange:ROE =
(NI / TA) (TA / TE) (Sales / Sales)ROE = (NI / Sales) (Sales /
TA) (TA / TE)ROE = PM * TAT * EM
*
3-*
Using the DuPont IdentityROE = PM * TAT * EMProfit margin
is a measure of the firm’s operating efficiency – how well it
controls costs.Total asset turnover is a measure of the firm’s

asset use efficiency – how well it manages its assets.Equity
multiplier is a measure of the firm’s financial leverage.
*
Improving our operating efficiency or our asset use efficiency
will improve our return on equity. If the TAT is low compared
to our benchmark, then we can break it down into more detail
by looking at inventory turnover and receivables turnover. If
those areas are strong, then we can look at fixed asset turnover
and cash management.
We can also improve our ROE by increasing our leverage – up
to a point. Debt affects a lot of other factors, including profit
margin, so we have to be a little careful here. We want to make
sure we have enough debt to utilize our interest tax credit
effectively, but we don’t want to overdo it.
3-*
Calculating the DuPont IdentityROA = 10.1% and EM =
1.39ROE = 10.1% * 1.385 = 14.0%PM = 15.7% and TAT =
0.64ROE = 15.7% * 0.64 * 1.385 = 14.0%
*
3-*
Potential ProblemsThere is no underlying theory, so there is no
way to know which ratios are most relevant.Benchmarking is
difficult for diversified firms.Globalization and international
competition makes comparison more difficult because of

differences in accounting regulations.Firms use varying
accounting procedures.Firms have different fiscal
years.Extraordinary, or one-time, events
*
3-*
3.4 Financial ModelsInvestment in new assets – determined by
capital budgeting decisionsDegree of financial leverage –
determined by capital structure decisionsCash paid to
shareholders – determined by dividend policy
decisionsLiquidity requirements – determined by net working
capital decisions
*
3-*
Financial Planning IngredientsSales Forecast – many cash flows
depend directly on the level of sales (often estimate sales
growth rate)Pro Forma Statements – setting up the plan as
projected (pro forma) financial statements allows for
consistency and ease of interpretationAsset Requirements – the
additional assets that will be required to meet sales
projectionsFinancial Requirements – the amount of financing
needed to pay for the required assetsPlug Variable – determined
by management decisions about what type of financing will be
used (makes the balance sheet balance)Economic Assumptions –
explicit assumptions about the coming economic environment

*
3-*
Percent of Sales ApproachSome items vary directly with sales,
others do not.Income StatementCosts may vary directly with
sales - if this is the case, then the profit margin is
constantDepreciation and interest expense may not vary directly
with sales – if this is the case, then the profit margin is not
constantDividends are a management decision and generally do
not vary directly with sales – this affects additions to retained
earnings
*
3-*
Percent of Sales ApproachBalance SheetInitially assume all
assets, including fixed, vary directly with sales.Accounts
payable also normally vary directly with sales.Notes payable,
long-term debt, and equity generally do not vary with sales
because they depend on management decisions about capital
structure.The change in the retained earnings portion of equity
will come from the dividend decision.External Financing
Needed (EFN)The difference between the forecasted increase in
assets and the forecasted increase in liabilities and equity.
*

3-*
Percent of Sales and EFNExternal Financing Needed (EFN) can
also be calculated as:
*
The first term measures the increase in assets, which is based on
the capital intensity ratio. The second and third terms capture
the increase in liabilities and equity, respectively.
3-*
3.5 External Financing and GrowthAt low growth levels,
internal financing (retained earnings) may exceed the required
investment in assets.As the growth rate increases, the internal
financing will not be enough, and the firm will have to go to the
capital markets for financing.Examining the relationship
between growth and external financing required is a useful tool
in financial planning.
*
3-*
The Internal Growth RateThe internal growth rate tells us how
much the firm can grow assets using retained earnings as the
only source of financing.Using the information from the

Hoffman Co.ROA = 66 / 500 = .132b = 44/ 66 = .667
*
The information for these calculations is given in Table 3.13.
This firm could grow assets at 9.65% without raising additional
external capital.
Relying solely on internally generated funds will increase
equity (retained earnings are part of equity) and assets without
an increase in debt. Consequently, the firm’s leverage will
decrease over time. If there is an optimal amount of leverage, as
we will discuss in later chapters, then the firm may want to
borrow to maintain that optimal level of leverage. This idea
leads us to the sustainable growth rate.
3-*
The Sustainable Growth RateThe sustainable growth rate tells
us how much the firm can grow by using internally generated
funds and issuing debt to maintain a constant debt ratio.Using
the Hoffman Co.ROE = 66 / 250 = .264b = .667
*
Note that no new equity is issued.
The sustainable growth rate is substantially higher than the
internal growth rate. This is because we are allowing the
company to issue debt as well as use internal funds.
Commonly, sustainable growth is calculated as only the
numerator of our formula (ROE * b), but this assumes we
calculate ROE based on beginning, rather than ending, equity.

3-*
Determinants of GrowthProfit margin – operating
efficiencyTotal asset turnover – asset use efficiencyFinancial
leverage – choice of optimal debt ratioDividend policy – choice
of how much to pay to shareholders versus reinvesting in the
firm
*
The first three components come from the ROE and the Du Pont
identity.
It is important to note at this point that growth is not the goal of
a firm in and of itself. Growth is only important so long as it
continues to maximize shareholder value.
3-*
3.6 Some CaveatsFinancial planning models do not indicate
which financial polices are the best.Models are simplifications
of reality, and the world can change in unexpected
ways.Without some sort of plan, the firm may find itself adrift
in a sea of change without a rudder for guidance.
*
3-*

Quick QuizHow do you standardize balance sheets and income
statements?Why is standardization useful?What are the major
categories of financial ratios?How do you compute the ratios
within each category?What are some of the problems associated
with financial statement analysis?
*
3-*
Quick QuizWhat is the purpose of financial planning?What are
the major decision areas involved in developing a plan?What is
the percentage of sales approach?What is the internal growth
rate?What is the sustainable growth rate?What are the major
determinants of growth?
*
565$
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)1(Sales) Projected(ΔSales
Sales
LiabSpon
Sales
Sales
Assets

dPM
%65.9
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667.132.1
667.132.
bROA - 1
bROA
RateGrowth Internal
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McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc.
All rights reserved.
Introduction to Corporate Finance
Chapter 1
*
1-*
Key Concepts and Skills
Know the basic types of financial management decisions and the
role of the Financial Manager
Know the financial implications of the various forms of
business organization
Know the goal of financial management
Understand the conflicts of interest that can arise between
owners and managers
Understand the various regulations that firms face
*
1-*
Chapter Outline
1.1 What is Corporate Finance?
1.2 The Corporate Firm

1.3 The Importance of Cash Flows
1.4 The Goal of Financial Management
1.5 The Agency Problem and Control of the Corporation
1.6 Regulation
*
1-*
1.1 What Is Corporate Finance?
Corporate Finance addresses the following three questions:
What long-term investments should the firm choose?
How should the firm raise funds for the selected investments?
How should short-term assets be managed and financed?
*Capital budgetingCapital structureWorking capital
1-*
Balance Sheet Model of the Firm
Current Assets
Fixed Assets
1 Tangible
2 Intangible
Total Value of Assets:
Shareholders’ Equity
Current Liabilities
Long-Term Debt
Total Firm Value to Investors:

*
It is sometimes helpful to relate corporate decisions to
individual circumstances. For example, consider discussing how
individuals choose to buy cars or homes and how this decision
would affect a personal balance sheet.
1-*
The Capital Budgeting Decision
Current Assets
Fixed Assets
1 Tangible
2 Intangible
Current Liabilities
Long-Term Debt
What long-term investments should the firm choose?
*
1-*
The Capital Structure Decision
How should the firm raise funds for the selected investments?
Current Assets

Fixed Assets
1 Tangible
2 Intangible
Current Liabilities
Long-Term Debt
*
1-*
Short-Term Asset Management
How should short-term assets be managed and financed?
Net Working Capital
Current Liabilities
Long-Term Debt
Current Assets
Fixed Assets
1 Tangible
2 Intangible
*
1-*

The Financial Manager
The Financial Manager’s primary goal is to increase the value
of the firm by:
Selecting value creating projects
Making smart financing decisions
*
Note, these actions explicitly relate to the three questions
addressed in slide 3.
1-*
Hypothetical Organization Chart
Chairman of the Board and

Chief Executive Officer (CEO)
President and Chief
Operating Officer (COO)
Vice President and
Chief Financial Officer (CFO)
Treasurer
Controller
Cash Manager
Capital Expenditures
Credit Manager
Financial Planning
Tax Manager
Financial Accounting
Cost Accounting
Data Processing
Board of Directors
*

1-*
1.2 The Corporate FirmThe corporate form of business is the
standard method for solving the problems encountered in raising
large amounts of cash.However, businesses can take other
forms.
*
1-*
Forms of Business OrganizationThe Sole ProprietorshipThe
PartnershipGeneral PartnershipLimited PartnershipThe
Corporation
*
It may be beneficial to discuss S-Corporations and LLCs in the
context of this slide.
1-*
A Comparison
Corporation
Partnership

Liquidity
Shares can be easily exchanged
Subject to substantial restrictions
Voting Rights
Usually each share gets one vote
General Partner is in charge; limited partners may have some
voting rights
Taxation
Double
Partners pay taxes on distributions
Reinvestment and dividend payout
Broad latitude

All net cash flow is distributed to partners
Liability
Limited liability
General partners may have unlimited liability; limited partners
enjoy limited liability
Continuity
Perpetual life
Limited life
*
1-*
Cash flow
from firm (C)
1.3 The Importance of Cash Flow

Taxes (D)
Retained
cash flows (F)
Invests
in assets
(B)
Dividends and
debt payments (E)
Current assets
Fixed assets
Short-term debt
Long-term debt
Equity shares
Ultimately, the firm must be a cash generating activity.
The cash flows from the firm must exceed the cash flows from
the financial markets.
Firm issues securities (A)
Government
Firm
Financial
markets
*
It is important to remind students that net income is NOT cash
flow.

1-*
1.4 The Goal of Financial ManagementWhat is the correct
goal?Maximize profit?Minimize costs?Maximize market
share?Maximize shareholder wealth?
*
1-*
1.5 The Agency ProblemAgency relationshipPrincipal hires an
agent to represent his/her interestStockholders (principals) hire
managers (agents) to run the companyAgency problemConflict
of interest between principal and agent
*
A common example of an agency relationship is a real estate
broker – in particular if you break it down between a buyers
agent and a sellers agent. A classic conflict of interest is when
the agent is paid on commission, so they may be less willing to
let the buyer know that a lower price might be accepted or they
may elect to only show the buyer homes that are listed at the
high end of the buyer’s price range.
Direct agency costs – the purchase of something for
management that can’t be justified from a risk-return
standpoint, monitoring costs.
Indirect agency costs – management’s tendency to forgo risky
or expensive projects that could be justified from a risk-return
standpoint.

1-*
Managerial GoalsManagerial goals may be different from
shareholder goalsExpensive
perquisitesSurvivalIndependenceIncreased growth and size are
not necessarily equivalent to increased shareholder wealth
*
1-*
Managing ManagersManagerial compensationIncentives can be
used to align management and stockholder interestsThe
incentives need to be structured carefully to make sure that they
achieve their intended goalCorporate controlThe threat of a
takeover may result in better managementOther stakeholders
*
Incentives – discuss how incentives must be carefully
structured. For example, tying bonuses to profits might
encourage management to pursue short-run profits and forego
projects that require a large initial outlay. Stock options may
work, but there may be an optimal level of insider ownership.
Beyond that level, management may be in too much control and
may not act in the best interest of all stockholders. The type of
stock can also affect the effectiveness of the incentive.
Corporate control – ask the students why the threat of a
takeover might make managers work towards the goals of
stockholders.

Other groups also have a financial stake in the firm. They can
provide a valuable monitoring tool, but they can also try to
force the firm to do things that are not in the owners’ best
interest.
1-*
1.6 RegulationThe Securities Act of 1933 and the Securities
Exchange Act of 1934 Issuance of Securities (1933)Creation of
SEC and reporting requirements (1934)Sarbanes-Oxley
(“Sarbox”)Increased reporting requirements and responsibility
of corporate directors
*
1-*
Quick QuizWhat are the three basic questions Financial
Managers must answer?What are the three major forms of
business organization?What is the goal of financial
management?What are agency problems, and why do they exist
within a corporation?What major regulations impact public
firms?
*
James Bucky Carter

A
s a graphic novel specialist and teacher educator,
I travel across the United States sharing informa-
tion on how teachers can use this media in their
classrooms to expand student literacy skills. The
questions, comments, and occasional resistance
I’ve encountered have led me to conclude that some misinfor-
mation concerning the pedagogical potential of graphic novels
is circulating among teachers. Some believe that graphic novels
are too risky to bring into the curriculum, others resist any
form of new literacy altogether, and many think that sequential
art narratives are only useful
for remedial or reluctant
readers. To clear up these
misconceptions, I’d like to
share a few facts about the
form and a few practical
suggestions for teachers
considering integrating
graphic novels into their
classes.
As Old as Cave Paintings
Sequential art narratives—
broadly defined as images
placed in sequence to tell a
story—have been steadily
gaining attention over the last
couple of decades as teachers, literacy experts, and librarians
have sought new means to engage reluctant readers and
inspire more motivated ones. Practitioners and researchers
have found these texts, usually published as graphic novels or
comic books, to be of great use in increasing library circula-

tion, creating new readers, helping English language learners,
motivating male readers, and even assisting gifted and
talented students. In many ways, it seems that the graphic
novel as accepted pedagogical text has “arrived.”
Actually, comics are not a new phenomenon, nor are the
attempts to connect them to education. Some would argue
that sequential art narratives date back to the earliest cave
paintings. Comic books,
which grew out of the news-
paper comic strips that
gained popularity in the
1880s and 1890s, have
existed in the United States
since the 1920s. Superhero
comics debuted in 1938 with
Action Comics #1, the first
appearance of Superman.
Not even the recently
popular Japanese import
comics, Manga, are 21st-
century inventions.
There is a long history of
the form being used for
teaching, including hiero-
68 E D U C AT I O N A L L E A D E R S H I P /M A R C H
2009
Going
Understanding what graphic novels are—
and aren’t—can help teachers make
the best use of this literary form.

©
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Special Topic
glyphics, tapestries, and stained glass
windows (McCloud, 1999). M. Thomas
Inge’s Comics as Culture (1990), Bradford
Wright’s Comic Book Nation (2001), and
Steven Krashen’s The Power of Reading
(2004) all cite studies from education
and sociological journals that date back
at least to the late 1930s. The term
graphic novel has been in use in the
United States since around 1964 and
gained widespread recognition in 1978
when Will Eisner prominently placed
the term on the cover of the paperback
edition of A Contract with God and Other
Tenement Stories. Although teachers have
paid more attention to sequential art
narration of late, comics and graphic
novels are better considered as “new to

you” rather than literally new.
An Art Form, Not a Genre
Another misconception is that graphic
novels and comics are a genre of litera-
ture (Carter, 2008). Westerns,
romances, science fiction, and fantasy
are genres. All-American Western, All
True Romance, Star Trek, and Sandman
are comics that feature each of these
genres, respectively. This distinction is
important because teachers may be
more willing to use sequential art narra-
tives to supplement existing curricu-
lums by looking for genre connections
rather than teaching comics in isolation.
In fact, I believe that integrating comics
into existing thematic units can be more
effective than studying the form in
isolation.
Studying how a graphic novelist
frames a story benefits students’ devel-
oping sense of craft and composition.
Comparing how Art Spiegelman uses
words and art to tell about his family’s
experiences during the Holocaust in
Maus to the conventions that Elie Wiesel
or Lois Lowry or Anne Frank (or all of
them) use when writing about the same
topic is even better. Teachers should
weigh their decision to teach comics
through study units focusing solely on
the form with the possibly more expan-
sive and connection-building method of

using this material to supplement
existing curriculums.
Not Just for Reluctant Readers
Much recent attention to graphic novels
results from the admirable efforts of
librarians who noticed drastic increases
in circulation once graphic novels were
added to their libraries. Articles from
their professional literature often
proclaim that young people who never
saw themselves as readers suddenly
devoured books once they were
exposed to graphic novels. On the basis
of these claims, educators began using
graphic novels to engage low-level or
reluctant readers.
There is evidence that certain popula-
tions (boys, for example) prefer visual
texts over those without visual elements
(Smith & Wilhelm, 2002) and that
allowing students to read comics may
engage students who are otherwise less
interested or less proficient in English
(Cary, 2004). Research has also shown
that comic book readers have a
tendency to read more varied texts and
that comic book reading often acts as a
gateway to both more reading and more
A S S O C I AT I O N F O R S U P E RV I S I O N A N D C U
R R I C U L U M D E V E L O P M E N T 69
©
S

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varied reading (Krashen, 2004).
Comics do have potential to motivate
reluctant readers, but the study of
sequential art can also benefit students
who are already motivated readers. For
example, Mitchell and George (1996)
used superhero comics to examine
morality and ethical issues with gifted
students, and I have observed teachers
using graphic novels as literature with
honors-level seniors. I have used
sequential art texts with students of
various reading levels with an age range
that extends from 6th grade to graduate
school.
Not Necessarily “Kid Stuff”
Another assumption that may prevent
teachers from sharing worthwhile
comics with older and more motivated
students or that may lead teachers to

make unwise decisions about appropri-
ateness in the classroom is that comics
are written for a young audience. The
notion that comic books are for children
is long-standing, and surely young
people have always been drawn to
them.
But, countering these assumptions,
exemplary graphic novels of the past 30
years have dealt with such mature
topics as date rape, teen pregnancy, the
Iraq war, Hurricane Katrina, genocide,
and gang violence, as well as all of the
major issues that adolescents face:
coming of age, identity formation,
friendship, and change. Even superhero
comics have explored such weighty
issues as drug addiction, mental illness,
HIV infection, and land mine safety.
Teachers can make mistakes easily
when they assume that all comic
book–style productions are for children.
At a recent talk in Normal, Illinois, a
teacher told me that a local 4th grade
teacher was having her students read
Persepolis, a wonderful coming-of-age
story about a young woman dealing
with the Iranian revolution of the 1970s
and 1980s. Although there are parts of
the novel where the narrator is at the
equivalent age of a U.S. 4th grader,
there are also explicit visual depictions

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