>>14344311There is a field of math literally known of Mathematical Finance with deals with the scientific way to actually value financial decisions. This theory can go really deep and becomes really verbose and esoteric, but this is probably the most widely used and important piece of math in modern society.
To show you how widespread this is, most modern financial modelling takes the form of a DCF model (discounted cash flow). In this type of model, you value a particular investment by first estimating its future cashflows and then ‘discounting’ them to what owning those cash flows today would cost.
I.e. if this investment will pay 200 dollars today, how much would you be willing to pay today to own it?
This model centers around a parameter known as the discount rate which is in turn a lot of times computed as your WACC (how much it costs you to acquire funding) which is in turn a value derived from modern portfolio theory - a famous part of mathematical finance.
This is used everywhere. Imagine you are Walmart and you want to invest in selling dog food. Your financial analysts estimate that for every 1$ you invest in dog food, you will earn 1.03$ dollars back so a 3% profit. But they also tell you that your WACC is 4%. Then you know you should NOT invest in dog food because it costs you more to fund it than you will get out of it.
In real life these numbers have some artistic liberties, but the formulas are all derived mathematically and in spirit you try to be as rigorous as possible because if you fuck up in this calculation you will lose billions of dollars.
