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From "David Hoffer" <david.hof...@issinc.com>
Subject RE: commons-math usage to calculate APR?
Date Sat, 16 Aug 2008 21:55:24 GMT
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:Luc.Maisonobe@free.fr] 
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:Luc.Maisonobe@free.fr] 
> 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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> 
> 
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