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62 lines
1.9 KiB
Python
62 lines
1.9 KiB
Python
"""
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Program to calculate the amortization amount per month, given
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- Principal borrowed
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- Rate of interest per annum
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- Years to repay the loan
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Wikipedia Reference: https://en.wikipedia.org/wiki/Equated_monthly_installment
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"""
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def equated_monthly_installments(
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principal: float, rate_per_annum: float, years_to_repay: int
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) -> float:
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"""
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Formula for amortization amount per month:
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A = p * r * (1 + r)^n / ((1 + r)^n - 1)
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where p is the principal, r is the rate of interest per month
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and n is the number of payments
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>>> equated_monthly_installments(25000, 0.12, 3)
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830.3577453212793
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>>> equated_monthly_installments(25000, 0.12, 10)
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358.67737100646826
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>>> equated_monthly_installments(0, 0.12, 3)
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Traceback (most recent call last):
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...
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Exception: Principal borrowed must be > 0
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>>> equated_monthly_installments(25000, -1, 3)
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Traceback (most recent call last):
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...
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Exception: Rate of interest must be >= 0
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>>> equated_monthly_installments(25000, 0.12, 0)
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Traceback (most recent call last):
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...
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Exception: Years to repay must be an integer > 0
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"""
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if principal <= 0:
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raise Exception("Principal borrowed must be > 0")
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if rate_per_annum < 0:
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raise Exception("Rate of interest must be >= 0")
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if years_to_repay <= 0 or not isinstance(years_to_repay, int):
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raise Exception("Years to repay must be an integer > 0")
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# Yearly rate is divided by 12 to get monthly rate
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rate_per_month = rate_per_annum / 12
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# Years to repay is multiplied by 12 to get number of payments as payment is monthly
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number_of_payments = years_to_repay * 12
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return (
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principal
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* rate_per_month
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* (1 + rate_per_month) ** number_of_payments
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/ ((1 + rate_per_month) ** number_of_payments - 1)
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)
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if __name__ == "__main__":
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import doctest
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doctest.testmod()
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