A man buying a car on finance has to calculate how much his monthly payments would be, how much he will pay in total, and how much the value of the car would depreciate over three years.

A good example of how complex calculations are relevant in everyday life. A man wishes to buy a car on finance over three years. He uses a formula to calculate his monthly payments at 5% interest, and the total he would pay over the three years. On learning a car depreciates in value by around 8% a year, he calculates the value of the car by the end of his finance deal. The calculations are shown in graphics on the screen. The man discovers his payments would be around £800 a month and the car would depreciate in value by around a third, and makes the sensible decision to choose a less expensive car.

Teacher Notes

Students could investigate their own affordability and budget; regarding different mobile packages or any other financial situations. This could also be used to research in science, medicine and other situations where growth or decay can be measured over time. Financial planning and investment can be based on “Problem based learning” and students could make inference and decisions about buying a car, financial growth in a company and loss of investment over time. Students could use this opportunity to look at stocks and shares as part of project based work.

Curriculum Notes

This clip is relevant for teaching Maths at KS4/GCSE level in England, Wales and Northern Ireland, and National 4/5 in Scotland.