If your loan fees are expressed as a fixed amount you may be able to
represent the total PV of the loan as loan amount + fees, and then solve
for the monthly payment amount using the annuity formula:
PV = C(1/r - 1/(r(1+r)^t))
=> C = PV/(1/r - 1/(r(1+r)^t))
Then you can build a payment schedule and calculate the APR of the
entire loan plus fees by calculating the IRR of the cash flows. Do you
actually need commons-math to do this? Could you do it in Excel instead,
using the IRR() or PMT() functions? That would probably be easier.
Rory
David Hoffer wrote:
Luc,
It's not clear to me that I could. See another email I just sent for the
approximate formula.
I think Newton-Raphson or Bisection can be used to solve the non-linear part
but I don't know how.
-Dave
-----Original Message-----
From: Luc Maisonobe [mailto:[EMAIL PROTECTED]
Sent: Saturday, August 16, 2008 3:45 PM
To: Commons Users List
Subject: Re: commons-math usage to calculate APR?
David Hoffer a écrit :
My usage is for USA only at this point.
I have inputs of loanAmount, monthlyInterestRate, numberMonths, loanFees;
so
this would be for fixed monthly payments.
You can try this (considering monthlyInterestRate is a number between
0.0 and 1.0, i.e. percent values have already been divided by 100.0, and
considering the loanFees are fixed monthly fees):
public double getMonthlyPayment(final double loanAmount,
final double monthlyInterestRate,
final int numberMonths,
final double loanFees) {
final double f = Math.pow(1 + monthlyInterestRate, numberMonths);
return loanFees + monthlyInterestRate * f * loanAmount / (f - 1);
}
Could you compute the APR from this monthly payment ?
Luc
I understand that commons-math doesn't have specific finance methods
however
I think the APR formula is a non-linear equation that I was hoping
commons-math could help solve.
-Dave
-----Original Message-----
From: Luc Maisonobe [mailto:[EMAIL PROTECTED]
Sent: Saturday, August 16, 2008 2:45 PM
To: Commons Users List
Subject: Re: commons-math usage to calculate APR?
David Hoffer a écrit :
Can anyone point me to an example of how to use commons-math to calculate
APR (Annual Percentage Rate)?
There are no specific finance related algorithm in commons-math.
I think this is solvable using either the NewtonSolver or BisectionSolver
but I am not sure how to accomplish this. Perhaps a different way is
better.
I think so, but it depends on what you really need. APR computation
seems to be slightly different depending on local regulations (for
example USA or EU). It also depends on the assumptions you do and the
input data. For example you can compute it one way for fixed monthly
payments and another way for varying monthly payments.
Any help would be greatly appreciated.
Could you explain your needs more precisely ?
Luc
Thanks.
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