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APR calculation help

Posted on 2009-03-28
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Last Modified: 2012-05-06
Hi, I want to calculate APR based on the inputs C, E, R and N.
Here is the math to solve:
http://www.efunda.com/formulae/finance/apr_calculator.cfm

I want to write in my php to calculate the APR.  But, I don't know how to solve this equation.
If not php, atleaset explain in whatever language you know, i can convert it to php.

Any help is appreciated.
Thanks.
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Question by:CWS (haripriya)
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LVL 18

Expert Comment

by:WaterStreet
ID: 24011326
Use the following formula

P = (C+E)r((1+r)^N)/((1+r)^N)-1)

The "^" symbol is whatever you programming language uses for raising to a power
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LVL 16

Author Comment

by:CWS (haripriya)
ID: 24011509
Hi,
Thanks for the quick reply. P is Monthly payment. I want to calculate the APR, for which they have given a formula which should be solved using Newton Raphsons iterative method, that is where  i am stuck.
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LVL 18

Expert Comment

by:WaterStreet
ID: 24011569
I can't apply the Newton Raphsons iterative method.

Maybe someone else here can help.  I'll stay subscribed.
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LVL 16

Author Comment

by:CWS (haripriya)
ID: 24011643
ok.
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LVL 16

Author Comment

by:CWS (haripriya)
ID: 24012688
I solved my problem.
This is the equation I used for Newton - Raphson method.

while ((apr_next>apr+my_range_top)||(apr_next<apr)) {
apr=apr_next;
apr_next=P/loanamount*(Math.pow(1+parseFloat(apr),term)-1)/(Math.pow(1+parseFloat(apr),term));
}


This is not my code. I copied from a website.
Will close the question now.
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LVL 16

Accepted Solution

by:
CWS (haripriya) earned 0 total points
ID: 24013364
This the Javascript solution that worked for me. For you to work you should use your form variables in the function.
<script language="javascript">

	function recalcapr(loantype, loanid)

	{

		if (document.forms.form1.aprtype.value=='Automatic')

		{

			if (document.forms.form1['intonly'+loanid].value=='1') var io=true;

			else var io=false;

			if (loantype=='c')

			{

				var rate=document.forms.form1['loan'+loanid+'conforming'].value;

				document.forms.form1['loan'+loanid+loantype+'apr'].value=calc_apr(document.forms.form1.othercost_con.value, rate, document.forms.form1['loan'+loanid+'term'].value, io, document.forms.form1.loanamt_con.value);

				

			}

			else

			{

				var rate=document.forms.form1['loan'+loanid+'jumbo'].value;

				document.forms.form1['loan'+loanid+loantype+'apr'].value=calc_apr(document.forms.form1.othercost_jum.value, rate, document.forms.form1['loan'+loanid+'term'].value, io, document.forms.form1.loanamt_jum.value);

			}	

		} 

	}

	

	function calc_apr(extracosts, rate,term, io,loanamount){ 

		var apr=0; 

		var total=parseFloat(loanamount)+parseFloat(extracosts);

		var P=calc_payment(total, rate, term, io); 

		rate=rate/1200;

		//alert (P);

		var apr_next=rate; 

		var my_range_top=.00000005; 

		var message='';

		var i=0;

		//Newton-Raphson method

		while ((apr_next>apr+my_range_top)||(apr_next<apr)) { 

			apr=apr_next; 

			apr_next=P/loanamount*(Math.pow(1+parseFloat(apr),term)-1)/(Math.pow(1+parseFloat(apr),term));

			} 

		return (apr*1200).toFixed(3); 

	} 
 

	function calc_apr_payment(costs, rate, term, io){

		var apr_payment=calc_payment(costs, rate, term);

		return apr_payment;

	}
 

	function calc_payment(amount, rate, term, io){

		r=rate/100/12;

		r1=r+1;

		t1=Math.pow(r1,term);

		payment=t1/(t1-1)*r*amount;

		return payment;

	}
 

</script>

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LVL 18

Expert Comment

by:WaterStreet
ID: 24013431
Okay.  Thanks

We're just waiting for the Community Support Moderator to close the question with points refunded and your posting 24012688 as the accepted solution.
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LVL 18

Expert Comment

by:WaterStreet
ID: 24014566
fine with me.
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