class MortgageBuddy::AprCalculator
Attributes
loan_amount[RW]
monthly_interest_rate[RW]
monthly_payment_with_fees[RW]
period[RW]
Public Class Methods
new(attributes={})
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# File lib/mortgage_buddy/apr_calculator.rb, line 5 def initialize(attributes={}) attributes.each do |name, value| send("#{name}=", value) end end
Public Instance Methods
apr()
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solves APR
- a (1 + a)^N
-
/ [(1 + a)^N - 1] - P/C = 0
where a = APR/1200, N = period, P = monthly payment, C = loan_amount
calculate APR uses the Newton-Raphson to find the root (the value for ‘a’ that makes f(a) = 0)
# File lib/mortgage_buddy/apr_calculator.rb, line 15 def apr payment_ratio = self.monthly_payment_with_fees / self.loan_amount f = lambda { |k| (k**(self.period + 1) - (k**self.period * (payment_ratio + 1)) + payment_ratio) } f_deriv = lambda { |k| ((self.period + 1) * k**self.period) - (self.period * (payment_ratio + 1) * k**(self.period - 1)) } root = newton_raphson(f, f_deriv, self.monthly_interest_rate + 1) 100 * 12 * (root - 1).to_f end
newton_raphson(f, f_deriv, start, precision = 5)
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if ‘start’ is the monthly_interest_rate
, Newton Raphson will find the apr root very quickly k1 = k0 - f(k0)/f’(k0) k_plus_one = k - f(k)/f_deriv(k) We find the k-intercept of the tangent line at point k_plus_one and compare k to k_plus_one. This is repeated until a sufficiently accurate value is reached, which can be specified with the ‘precision’ parameter
# File lib/mortgage_buddy/apr_calculator.rb, line 29 def newton_raphson(f, f_deriv, start, precision = 5) k_plus_one = start k = 0.0 while ((k - 1) * 10**precision).to_f.floor != ((k_plus_one - 1) * 10**precision).to_f.floor k = k_plus_one k_plus_one = k - f.call(k) / f_deriv.call(k) end k_plus_one end