refinance 0.0.1

data/.gitignore

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+*.gem
+*.rbc
+.bundle
+.config
+.yardoc
+Gemfile.lock
+InstalledFiles
+_yardoc
+coverage
+doc/
+lib/bundler/man
+pkg
+rdoc
+spec/reports
+test/tmp
+test/version_tmp
+tmp

data/Gemfile

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+source 'https://rubygems.org'
+
+# Specify your gem's dependencies in refinance.gemspec
+gemspec

data/LICENSE.txt

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+Copyright (c) 2012 reInteractive
+
+MIT License
+
+Permission is hereby granted, free of charge, to any person obtaining
+a copy of this software and associated documentation files (the
+"Software"), to deal in the Software without restriction, including
+without limitation the rights to use, copy, modify, merge, publish,
+distribute, sublicense, and/or sell copies of the Software, and to
+permit persons to whom the Software is furnished to do so, subject to
+the following conditions:
+
+The above copyright notice and this permission notice shall be
+included in all copies or substantial portions of the Software.
+
+THE SOFTWARE IS PROVIDED "AS IS", WITHOUT WARRANTY OF ANY KIND,
+EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF
+MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
+NONINFRINGEMENT. IN NO EVENT SHALL THE AUTHORS OR COPYRIGHT HOLDERS BE
+LIABLE FOR ANY CLAIM, DAMAGES OR OTHER LIABILITY, WHETHER IN AN ACTION
+OF CONTRACT, TORT OR OTHERWISE, ARISING FROM, OUT OF OR IN CONNECTION
+WITH THE SOFTWARE OR THE USE OR OTHER DEALINGS IN THE SOFTWARE.

data/README.md

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+# Refinance
+
+Refinance is a Ruby gem that provides a collection of finance algorithms.
+Currently, it contains algorithms for calculating the properties of ordinary
+annuities: principal, interest rate, number of payment periods, and payment
+amount.
+
+The algorithms are simple rather than fast. At present, they deal only with
+_annuities immediate_ (in which the interest is accumulated _before_ the
+payment), not _annuities due_ (in which the interest is accumulated _after_ the
+payment). There are many opportunities for extension and improvement.
+
+## Requirements
+
+This library requires Ruby 1.9.3 or newer. (However, it will work with Ruby
+1.9.2 if you only use Float, not BigDecimal, for floating-point values.)
+
+## Installation
+
+Add this line to your application's Gemfile:
+
+    gem 'refinance'
+
+And then execute:
+
+    $ bundle
+
+Or install it yourself as:
+
+    $ gem install refinance
+
+## Contributing
+
+1. Fork it
+2. Create your feature branch (`git checkout -b my-new-feature`)
+3. Commit your changes (`git commit -am 'Add some feature'`)
+4. Push to the branch (`git push origin my-new-feature`)
+5. Create new Pull Request
+
+## Authorship and copyright information
+
+This software was written by [reInteractive](http://reinteractive.net/), a
+software consulting company in Sydney, Australia. It is distributed under the
+MIT License; see LICENSE.txt for details.
+
+## Acknowledgements
+
+Thanks to Stan Brown for his paper _[Loan or Investment
+Formulas](http://oakroadsystems.com/math/loan.htm)_. It is an excellent
+introduction to the mathematics of annuities, and we used some of its examples
+as test cases.

data/Rakefile

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+require "bundler/gem_tasks"
+require "rake/testtask"
+
+Rake::TestTask.new(:test) do |t|
+  t.libs << "test"
+  t.test_files = FileList["test/**/*_test.rb"]
+  t.verbose = true
+end
+
+task :default => :test

data/lib/refinance/annuities.rb

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+module Refinance
+
+  ##
+  # This module contains methods for calculating the basic properties of
+  # annuities. Annuities are assumed to be an annuities immediate (that is,
+  # interest is accumulated before the payment).
+  #
+  # The floating-point numbers you pass in as arguments can be instances of
+  # Float or BigDecimal. Actually, thanks to duck typing, they can be any
+  # objects that support the necessary operations.
+  #
+  module Annuities
+
+    ##
+    # Determine an annuity's interest rate over some period, given:
+    #
+    # * Periodic payment amount
+    # * Number of payment periods
+    # * Principal
+    #
+    # This has no closed-form solution, so the answer is iteratively
+    # approximated with the Newton-Raphson method. After each improvement, the
+    # guess will be rounded; _max_decimals_ is the number of decimal places to
+    # keep (if you set this high, the algorithm will be slow). _max_iterations_
+    # is the maximum number of iterations that will be attempted. It will stop
+    # iterating if the last improvement was less than _precision_ in magnitude.
+    #
+    def self.interest_rate(payment, periods, principal, initial_guess = 0.1,
+      precision = 0.0001, max_decimals = 8, max_iterations = 10)
+      guess = initial_guess
+
+      max_iterations.times do
+        new_guess = improve_interest_rate(payment, periods, principal, guess).
+          round(max_decimals)
+        difference = (guess - new_guess).abs
+        guess = new_guess
+        break if difference < precision
+      end
+
+      guess
+    end
+
+    ##
+    # Iteratively improve an approximated interest rate for an annuity using
+    # the Newton-Raphson method. This method is used by ::interest_rate.
+    #
+    def self.improve_interest_rate(payment, periods, principal, guess)
+      top = payment - (payment * ((guess + 1) ** -periods)) -
+        (principal * guess)
+      bottom = (periods * payment * ((guess + 1) ** (-periods - 1))) -
+        principal
+      guess - (top / bottom)
+    end
+
+    ##
+    # Determine an annuity's periodic payment amount, given:
+    #
+    # * Interest rate over a period
+    # * Number of payment periods
+    # * Principal
+    #
+    def self.payment(interest_rate, periods, principal)
+      (interest_rate * principal) / (1 - ((interest_rate + 1) ** -periods))
+    end
+
+    ##
+    # Determine the number of payment periods for an annuity, given:
+    #
+    # * Interest rate over a period
+    # * Periodic payment amount
+    # * Principal
+    #
+    def self.periods(interest_rate, payment, principal)
+      -Math.log(1 - ((interest_rate * principal) / payment)) /
+        Math.log(interest_rate + 1)
+    end
+
+    ##
+    # Determine an annuity's principal, given:
+    #
+    # * Interest rate over a period
+    # * Periodic payment amount
+    # * Number of payment periods
+    #
+    def self.principal(interest_rate, payment, periods)
+      (payment / interest_rate) * (1 - ((interest_rate + 1) ** -periods))
+    end
+
+    ##
+    # Determines the effective interest rate, given:
+    #
+    # * The nominal annual interest rate
+    # * The number of compounding periods per year
+    #
+    def self.effective_interest_rate(nair, cppy)
+      (((nair / cppy) + 1) ** cppy) - 1
+    end
+  end
+end

data/lib/refinance/version.rb

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+module Refinance
+  VERSION = "0.0.1"
+end

data/lib/refinance.rb

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+require "refinance/version"
+require "refinance/annuities"
+
+module Refinance
+end

data/refinance.gemspec

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+# -*- encoding: utf-8 -*-
+lib = File.expand_path('../lib', __FILE__)
+$LOAD_PATH.unshift(lib) unless $LOAD_PATH.include?(lib)
+require 'refinance/version'
+
+Gem::Specification.new do |gem|
+  gem.name = "refinance"
+  gem.version = Refinance::VERSION
+  gem.authors = ["reInteractive"]
+  gem.email = ["enquiries@reinteractive.net"]
+  gem.description = %q{A collection of finance algorithms related to annuities.}
+  gem.summary = %q{Simple annuity algorithms}
+  gem.homepage = "https://github.com/reinteractive-open/refinance"
+  gem.license = "MIT"
+  gem.required_ruby_version = ">= 1.9.3"
+
+  gem.files = `git ls-files`.split($/)
+  gem.executables = gem.files.grep(%r{^bin/}).map{ |f| File.basename(f) }
+  gem.test_files = gem.files.grep(%r{^(test|spec|features)/})
+  gem.require_paths = ["lib"]
+
+  gem.add_development_dependency 'rake', '0.9.2.2'
+  gem.add_development_dependency 'minitest', '3.5.0'
+end

data/test/bigdecimal_annuities_test.rb

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+require 'minitest/autorun'
+require 'bigdecimal'
+require 'refinance'
+
+class BigDecimalAnnuitiesTest < MiniTest::Unit::TestCase
+
+  def test_improve_interest_rate
+    # Based on Example 6 in http://oakroadsystems.com/math/loan.htm .
+    payment = BigDecimal.new('291')
+    periods = BigDecimal.new('48')
+    principal = BigDecimal.new('11200')
+    guess = BigDecimal.new('0.01')
+
+    expected = BigDecimal.new('0.0094295242')
+    actual = Refinance::Annuities.improve_interest_rate(payment, periods,
+      principal, guess)
+
+    assert_in_delta expected, actual, BigDecimal.new('0.00000001')
+  end
+
+  def test_interest_rate_stops_if_improvement_is_small
+    # Based on Example 6 in http://oakroadsystems.com/math/loan.htm .
+    payment = BigDecimal.new('291')
+    periods = BigDecimal.new('48')
+    principal = BigDecimal.new('11200')
+    guess = BigDecimal.new('0.01')
+    imprecision = BigDecimal.new('0.5')
+
+    expected = BigDecimal.new('0.0094295242')
+    actual = Refinance::Annuities.interest_rate(payment, periods, principal,
+      guess, imprecision)
+
+    assert_in_delta expected, actual, BigDecimal.new('0.00000001')
+  end
+
+  def test_interest_rate_stops_if_max_iterations_reached
+    extreme_precision = BigDecimal.new('0')
+    guess = BigDecimal.new('0.01')
+
+    expected = guess
+    actual = Refinance::Annuities.interest_rate(0, 0, 0, guess,
+      extreme_precision, 1, 0)
+
+    assert_equal expected, actual
+  end
+
+  def test_interest_rate_does_multiple_iterations
+    # Based on Example 6 in http://oakroadsystems.com/math/loan.htm .
+    payment = BigDecimal.new('291')
+    periods = BigDecimal.new('48')
+    principal = BigDecimal.new('11200')
+    guess = BigDecimal.new('0.01')
+    extreme_precision = BigDecimal.new('0')
+    max_iterations = 4
+
+    expected = BigDecimal.new('0.0094007411')
+    actual = Refinance::Annuities.interest_rate(payment, periods, principal,
+      guess, extreme_precision, 10, 4)
+
+    assert_in_delta expected, actual, BigDecimal.new('0.0000000001')
+  end
+
+  def test_payment
+    # Based on Example 2 in http://oakroadsystems.com/math/loan.htm .
+    interest_rate = BigDecimal.new('0.0065')
+    periods = BigDecimal.new('360')
+    principal = BigDecimal.new('225000')
+
+    expected = BigDecimal.new('1619.708627')
+    actual = Refinance::Annuities.payment(interest_rate, periods, principal)
+
+    assert_in_delta expected, actual, BigDecimal.new('0.000001')
+  end
+
+  def test_periods
+    # Based on Example 3 in http://oakroadsystems.com/math/loan.htm .
+    interest_rate = BigDecimal.new('0.005')
+    payment = BigDecimal.new('100')
+    principal = BigDecimal.new('3500')
+
+    expected = BigDecimal.new('38.57')
+    actual = Refinance::Annuities.periods(interest_rate, payment, principal)
+
+    assert_in_delta expected, actual, BigDecimal.new('0.01')
+  end
+
+  def test_principal
+    # Based on Example 5 in http://oakroadsystems.com/math/loan.htm .
+    interest_rate = BigDecimal.new('0.014083')
+    payment = BigDecimal.new('60')
+    periods = BigDecimal.new('36')
+
+    expected = BigDecimal.new('1685.26') # Example fudges to 1685.25.
+    actual = Refinance::Annuities.principal(interest_rate, payment, periods)
+
+    assert_in_delta expected, actual, BigDecimal.new('0.01')
+  end
+
+  def test_effective_interest_rate
+    nominal_annual_interest_rate = BigDecimal.new('0.1')
+    compounding_periods_per_year = BigDecimal.new('12')
+
+    expected = BigDecimal.new('0.10471')
+    actual = Refinance::Annuities.effective_interest_rate(
+      nominal_annual_interest_rate, compounding_periods_per_year)
+
+    assert_in_delta expected, actual, BigDecimal.new('0.00001')
+  end
+end

data/test/float_annuities_test.rb

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+require 'minitest/autorun'
+require 'refinance'
+
+class FloatAnnuitiesTest < MiniTest::Unit::TestCase
+
+  def test_improve_interest_rate
+    # Based on Example 6 in http://oakroadsystems.com/math/loan.htm .
+    payment = 291.0
+    periods = 48.0
+    principal = 11200.0
+    guess = 0.01
+
+    expected = 0.0094295242
+    actual = Refinance::Annuities.improve_interest_rate(payment, periods,
+      principal, guess)
+
+    assert_in_delta expected, actual, 0.00000001
+  end
+
+  def test_interest_rate_stops_if_improvement_is_small
+    # Based on Example 6 in http://oakroadsystems.com/math/loan.htm .
+    payment = 291.0
+    periods = 48.0
+    principal = 11200.0
+    guess = 0.01
+    imprecision = 0.5
+
+    expected = 0.0094295242
+    actual = Refinance::Annuities.interest_rate(payment, periods, principal,
+      guess, imprecision)
+
+    assert_in_delta expected, actual, 0.00000001
+  end
+
+  def test_interest_rate_stops_if_max_iterations_reached
+    extreme_precision = 0.0
+    guess = 0.01
+
+    expected = guess
+    actual = Refinance::Annuities.interest_rate(0, 0, 0, guess,
+      extreme_precision, 1, 0)
+
+    assert_equal expected, actual
+  end
+
+  def test_interest_rate_does_multiple_iterations
+    # Based on Example 6 in http://oakroadsystems.com/math/loan.htm .
+    payment = 291.0
+    periods = 48.0
+    principal = 11200.0
+    guess = 0.01
+    extreme_precision = 0.0
+    max_iterations = 4
+
+    expected = 0.0094007411
+    actual = Refinance::Annuities.interest_rate(payment, periods, principal,
+      guess, extreme_precision, 10, 4)
+
+    assert_in_delta expected, actual, 0.0000000001
+  end
+
+  def test_payment
+    # Based on Example 2 in http://oakroadsystems.com/math/loan.htm .
+    interest_rate = 0.0065
+    periods = 360.0
+    principal = 225000.0
+
+    expected = 1619.708627
+    actual = Refinance::Annuities.payment(interest_rate, periods, principal)
+
+    assert_in_delta expected, actual, 0.000001
+  end
+
+  def test_periods
+    # Based on Example 3 in http://oakroadsystems.com/math/loan.htm .
+    interest_rate = 0.005
+    payment = 100.0
+    principal = 3500.0
+
+    expected = 38.57
+    actual = Refinance::Annuities.periods(interest_rate, payment, principal)
+
+    assert_in_delta expected, actual, 0.01
+  end
+
+  def test_principal
+    # Based on Example 5 in http://oakroadsystems.com/math/loan.htm .
+    interest_rate = 0.014083
+    payment = 60.0
+    periods = 36.0
+
+    expected = 1685.26 # Example fudges to 1685.25.
+    actual = Refinance::Annuities.principal(interest_rate, payment, periods)
+
+    assert_in_delta expected, actual, 0.01
+  end
+
+  def test_effective_interest_rate
+    nominal_annual_interest_rate = 0.1
+    compounding_periods_per_year = 12.0
+
+    expected = 0.10471
+    actual = Refinance::Annuities.effective_interest_rate(
+      nominal_annual_interest_rate, compounding_periods_per_year)
+
+    assert_in_delta expected, actual, 0.00001
+  end
+end

data/test/refinance_test.rb

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+require 'minitest/autorun'
+require 'refinance'
+
+class RefinanceTest < MiniTest::Unit::TestCase
+  def test_refinance_is_a_module
+    assert_kind_of Module, ::Refinance
+  end
+
+  def test_version_is_a_string
+    assert_kind_of String, ::Refinance::VERSION
+  end
+end

metadata

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+--- !ruby/object:Gem::Specification
+name: refinance
+version: !ruby/object:Gem::Version
+  version: 0.0.1
+  prerelease: 
+platform: ruby
+authors:
+- reInteractive
+autorequire: 
+bindir: bin
+cert_chain: []
+date: 2012-09-27 00:00:00.000000000 Z
+dependencies:
+- !ruby/object:Gem::Dependency
+  name: rake
+  requirement: !ruby/object:Gem::Requirement
+    none: false
+    requirements:
+    - - '='
+      - !ruby/object:Gem::Version
+        version: 0.9.2.2
+  type: :development
+  prerelease: false
+  version_requirements: !ruby/object:Gem::Requirement
+    none: false
+    requirements:
+    - - '='
+      - !ruby/object:Gem::Version
+        version: 0.9.2.2
+- !ruby/object:Gem::Dependency
+  name: minitest
+  requirement: !ruby/object:Gem::Requirement
+    none: false
+    requirements:
+    - - '='
+      - !ruby/object:Gem::Version
+        version: 3.5.0
+  type: :development
+  prerelease: false
+  version_requirements: !ruby/object:Gem::Requirement
+    none: false
+    requirements:
+    - - '='
+      - !ruby/object:Gem::Version
+        version: 3.5.0
+description: A collection of finance algorithms related to annuities.
+email:
+- enquiries@reinteractive.net
+executables: []
+extensions: []
+extra_rdoc_files: []
+files:
+- .gitignore
+- Gemfile
+- LICENSE.txt
+- README.md
+- Rakefile
+- lib/refinance.rb
+- lib/refinance/annuities.rb
+- lib/refinance/version.rb
+- refinance.gemspec
+- test/bigdecimal_annuities_test.rb
+- test/float_annuities_test.rb
+- test/refinance_test.rb
+homepage: https://github.com/reinteractive-open/refinance
+licenses:
+- MIT
+post_install_message: 
+rdoc_options: []
+require_paths:
+- lib
+required_ruby_version: !ruby/object:Gem::Requirement
+  none: false
+  requirements:
+  - - ! '>='
+    - !ruby/object:Gem::Version
+      version: 1.9.3
+required_rubygems_version: !ruby/object:Gem::Requirement
+  none: false
+  requirements:
+  - - ! '>='
+    - !ruby/object:Gem::Version
+      version: '0'
+      segments:
+      - 0
+      hash: 803431032426501235
+requirements: []
+rubyforge_project: 
+rubygems_version: 1.8.24
+signing_key: 
+specification_version: 3
+summary: Simple annuity algorithms
+test_files:
+- test/bigdecimal_annuities_test.rb
+- test/float_annuities_test.rb
+- test/refinance_test.rb