| | Film Series Three: Mathematics of Finance and GrowthIn this series of films we examine many circumstances where it is crucial to understand what is happening over a substantial time period. Individuals sometimes have to save for some while in order to finance large expenditures. How quickly do savings grow if the money is saved? Businesses frequently take decisions on whether it is worth borrowing in order to refurbish or expand. Sometimes people are not incurring debt but trying to get out of it. How do people pay back to banks and building societies the large sums they have borrowed to buy a house? We see how the mathematics of finance can help give an insight into these questions. These video clips and animations can be viewed in isolation, or you can use our learning pathway and follow links to related material in our Question Bank.
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3.03 Compound Growth Rates in an Austrian Health Spa
Bad Blumau is a remarkable health and fitness spa 40 miles from Vienna. In this example we assume that managers wish to add a new service at the spa that will cost 100,000 Euro to establish. Assuming an increase in visitor numbers attracted by the new service, how long will it take for the investment to be recovered? (Duration 8 minutes 14 seconds).
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3.05 The Mathematics of Finance - Understanding DCF Techniques
In this section we look at decisions to invest and derive the formula for calculating Discounted Cash Flow. This helps us address such questions as whether it is financially worthwhile getting a degree, or if a company should spend money on capital investment. Will what they get back in sales, or in cost savings, justify the expenditure? (Duration 8 minutes 1 second).
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3.08 Eurotunnel - A Bad Investment
Sometimes investment decisions go spectacularly wrong. For example, the private investors who funded the Eurotunnel project lost nearly all their money. In this case the mathematics was correct, but this film shows how its value as a tool for making investment decisions depends on the accuracy of the forecast data that is processed. (Duration 3 minutes 51 seconds).
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