Class: MortgageBuddy::AprCalculator

Inherits:
Object
  • Object
show all
Defined in:
lib/mortgage_buddy/apr_calculator.rb

Instance Attribute Summary collapse

Instance Method Summary collapse

Constructor Details

#initialize(attributes = {}) ⇒ AprCalculator 



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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

Instance Attribute Details

#loan_amount ⇒ Object

Returns the value of attribute loan_amount.



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# File 'lib/mortgage_buddy/apr_calculator.rb', line 3

def loan_amount
  @loan_amount
end

#monthly_interest_rate ⇒ Object

Returns the value of attribute monthly_interest_rate.



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# File 'lib/mortgage_buddy/apr_calculator.rb', line 3

def monthly_interest_rate
  @monthly_interest_rate
end

#monthly_payment_with_fees ⇒ Object

Returns the value of attribute monthly_payment_with_fees.



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# File 'lib/mortgage_buddy/apr_calculator.rb', line 3

def monthly_payment_with_fees
  @monthly_payment_with_fees
end

#period ⇒ Object

Returns the value of attribute period.



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# File 'lib/mortgage_buddy/apr_calculator.rb', line 3

def period
  @period
end

Instance Method Details

#apr ⇒ Object

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)



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# 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) ⇒ Object

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



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# 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