Thanks for the quick response, Soham. I'll check in with the team
regarding the half-up rounding feature. Looks like everything else
should be in order for your feature, other than the DB upgrade tweaks
you mention as well as small text changes. So, we'll be in touch with
feedback about your patch as soon as the review is done (hopefully
sometime tomorrow).
Thanks,
Aliya
________________________________
From: Soham Dhakal [mailto:[EMAIL PROTECTED]
Sent: Sunday, February 24, 2008 8:26 PM
To: Aliya Walji; mifos-functional@lists.sourceforge.net
Subject: RE: [Mifos-functional] FW: New Feature Request
-LoanInterestCalc.withequal principal payment
Hi Aliya,
Please see my responses below
________________________________
From: Aliya Walji [mailto:[EMAIL PROTECTED]
Sent: Monday, February 25, 2008 3:41 AM
To: mifos-functional@lists.sourceforge.net; Soham Dhakal
Subject: RE: [Mifos-functional] FW: New Feature Request
-LoanInterestCalc.withequal principal payment
Hi Soham,
Apologies for never responding to your updates to our discussion
around the "Declining balance - equal principal installments" feature.
I know your patch has already been submitted so it's getting a bit late
for providing feedback, however I realised that your open questions
around grace period still remain, so I wanted to address those. Our
team will be reviewing your patch on Monday. If it is accepted, then we
can open bugs to address any areas that need to change based on our
discussions. Otherwise, if you have to re-submit the patch for any
reason, you can just address the changes from this discussion in your
next patch submission.
[soham] Sounds good. The patch I submitted was based on the
current revision for that date, so there will have to be some changes
for the database upgrade functionality at the very least. But i think
the team there is used to such changes. Additionally I have not changed
the text of the existing "Declining Balance" to "Declining Balance -
Equal Monthly Installments" because there were some changes to the
description for all lookup values through the configuration project.
However, I still need a "feature" added as part of the
configuration project with respect to rounding. I have emailed before on
this to the developer list. Basically I need a setting that allows me to
round up if the amount is .50 and above, and round down if its less than
.50. Currently only two settings are supported Ceiling and Floor, and i
need a half up rounding. Perhaps you can add this to the discussion
during the review.
The only area I wanted to re-open from our discussions on this
feature in the past at this point is the detail around grace period.
Specifically, I noticed that in your updates to the functional spec on
Mifos.org, you have assumed that when a grace period is enabled for a
loan account where the grace type is "All repayments", the installments
of grace are included in the total number of installments (e.g. if you
have a loan account with 25 installments, grace on all repayments, and 3
installments of grace, there will be grace for 3 installments followed
by 22 normal installments). The way Mifos works is to actually not
include the grace period installments in the total number of
installments. So, if you have a loan account with weekly repayments,
grace on all repayments for 3 installments and a total of 25
installments for the loan repayment, the loan will be disbursed,
followed by three weeks of grace period, followed by 25 installments of
regular repayments. Basically, when you have grace on all repayments
for x installments, the whole loan schedule is just shifted by x
installments versus the number of installments being changed. It's what
you would call "Option A" below for grace on all repayments.
[soham] After looking at the code I was able to see the current
behavior of the Grace on all (that you have described above), thus i
made the coding changes for this feature to be consistent with current
behavior. What this means is the grace functionality works similar to
Declining Balance. I will update the feature document.
In Mifos, when you have "Principal only" grace, the behavior is
actually as you specify for "Option B". The total number of
installments is still the same, but the principal only starts being paid
back for the remaining installments after the grace period is complete.
So, your spec/implementation is correct for this type of grace period
and no changes need to be made around that.
[soham] Yes.
Finally, you'd asked in your email below about what the DB
settings for 'always recalculate' or 'never recalculate' interest for
late/early payments do. I suspect that they are actually DB settings
that do not yet actually affect behavior of the application. There are
a few DB settings that were never actually implemented in the
application and I think this is one of them.
[soham] It seems there was an initial thought to allow a setting
to control recalculation based on early/late payments but it might have
been removed later on..
Anyway, again, sorry for the late response on your email and
spec questions. Hopefully you'll be comfortable making the necessary
changes to the spec and implementation around grace period
functionality. If you have any concerns around this please let us know
and we can address them.
[soham] No problem. Grace functionality is working consistent
with declining interest so no changes required there, but will wait for
the patch review to see if anything else comes up.
Thanks,
Aliya
________________________________
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED] On Behalf Of
Soham Dhakal
Sent: Wednesday, November 14, 2007 10:23 PM
To: 'Mifos functional discussions'
Subject: [Mifos-functional] FW: New Feature Request
-LoanInterestCalc.withequal principal payment
Hi Aliya,
Thanks for the feedback, and please see my response below
(especially about the grace issue, since i need some input in this from
others as well).
Regards
Soham
________________________________
Naming of this feature in the UI
It sounds like one of the only open issues is the naming
of the feature and how it shows up in the drop down selection when you
define a loan product.
I liked your suggestion about making it a subset of
'Declining balance'. Though I don't have any finance expertise to be
able to comment on how this is typically named, my suggestion would be
that the drop down has three values in it when this feature is added:
Flat
Declining balance - equal monthly installments
Declining balance - equal principal installments
Does anyone else in the community have experience with
how these two types of calculations are typically named in the finance
world? It would be nice to get some suggestions from anyone with
knowledge in this area
[soham] Yes I agree, and perhaps someone can suggest an
appropriate name
Payment schedule
I notice in the example payment schedule you have
provided, the Pp (principal paid) is listed as 660 in your interest
calculation. I think this is a typo and should be 600? Or am I
misunderstanding something?
[soham] yes this is a typo. It should be 600 and i will
update the doc.
Interest recalculation
One thing I wanted to note is that Mifos does not
recalculate interest if a payment is missed. It doesn't seem from the
design of this feature that you expect to recalculate interest, however
I wanted to be clear that a basic assumption with this
feature/functional specification is that this behavior will not change.
Can you please add this as an assumption in your 'consideration and
assumptions' section?
[soham] Yes, I did make that assumption. But one thing
that confused me, and perhaps someone can clarify, in the database there
is a setting to "Always recalculate" or "Never Recalculate" for
late/early payments and the manual (from June 2006) also mentions this
functionality. Was this removed? So if a client makes a payment that is
more than the scheduled principal the interest for the next cycle will
not reflect it then? or how is this handled?
------
Grace periods functionality
In your spec you mention that grace functionality would
be applied to this type of interest. I think the 'grace on all
payments' behavior is straight forward. Can you give an example of what
the repayments would look like if the loan account is created with
'principal only' grace? I think this is still relatively straight
forward (still follows the formula in the same way) but I want to be
sure that there's an explicit example so there's no confusion. Could
you add this in?
[soham] I thought this was straightforward, but come to
think of it i have some questions around how it should be handled. CSD
or SBB do not use grace at all so perhaps others can suggest , or
completely not allow?.
The question is,does applying grace mean that the number
of payments is reduced and will have higher principal? or the principal
will still be divided over the term, and the first payment (after grace)
includes the addition of previous (grace) payments?
here are some examples to explain it better
Principal - 15000, Nbr of payments - 25, IR - 25%,
Grace Period - 3
CASE 1: Graceon All payments
Option A: EPI = (15000/25) = 600.Thus the payment
schdule for the 4th payment would be (4*600) 2400, and the remaining
payments (principal) would all be 600. The interest would be calculated
by the formula as mentioned in the feature doc.
Option B: No Principal or interest due on the first 3
payments. EPI = 15000/(25-3)=681.82. So the remaining 22 payments would
all have princpal 681.82 and interest would be calculated based on
number of days for the remaining principal for each of the installments.
CASE 2: Principal only Grace
Option A: EPI = 600. There would be no principal due on
the first 3 payments, but the interest due would be (15,000 -
0)*0.25*14/365 = 143.83for each of the 3 payments. Again the 4th
payment would have principal due of (4*600) =2400, and the remaining
payments (principal) would all be 600. The interest would be calculated
by the formula as mentioned in the feature doc
Option B: There would be no principal due on the first 3
payments, but the interest due would be 143.83 for each of the 3
payments. EPI = 15000/(25-3)=681.82. So the remaining 22 payments would
all have princpal 681.82 and interest would be calculated based on
number of days for the remaining principal for each of the installments.
I am leaning to option B, but looking for others
feedback as to what would make more sense
Principal due on last installment
If the user selects this option and the calculation
becomes the same as the existing 'declining balance' interest rate type,
do you think we should disable the checkbox from being selected? This
isn't a suggestion, but really a question. I'm not sure what is better
from a user perspective but I'm leaning towards disabling that
functionality (graying out the checkbox and making it unselectable) so
that it's clear that it will not result in equal principal installments
(because no principal is actually being paid per installment). What do
you think?
[soham] I agree with you that this check box should be
disabled for this type of calculation.
Anyway, let me know your thoughts on the above feedback.
Thanks again for putting together a clear specification and getting it
up on the wiki for us quickly. Thanks also for your patience in waiting
for feedback from me.
Regards,
Aliya
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