forum.vdsworld.com

arcray

I think it is a European thing, but APR is required by law to be quoted on all paperwork relating to loans, finance deals etc., here in the UK.

So that if I sell an item for 1000 (call this %X) uk pounds and offer the customer the opportunity to pay over 10 (call this %Y) months at a flat interest rate of 10% (call this %Z), which works out at a monthly payment of 110 ukpounds a month for 10 months...

However I then have to work out the real rate of interest which is normally about double %Z.

Has anyone done this in VDS? I can do it in Excel, but I'd like to work it out in VDS as well, so that I can quote the APR always even if the term (%Y), flat rate (%Z) and principle (%X) varies when required.

Thanks in advance

Mac · Posted: Fri Jan 10, 2003 9:40 am Post subject:

How about postin' the formula you use in Excel... Wink

Cheers, Mac Smile

arcray · Posted: Fri Jan 10, 2003 10:37 am Post subject:

It is more a complete spreadsheet than just one formula. In maths terms it looks something like this:-

%A=(1+(%X/100))^1/%Y

then where %W is equal to the monthly payment,

"((%Ax%X)^10)-((%Wx%A)^9)-((%Wx%A)^8)-((%Wx%A)^7)-((%Wx%A)^6)-((%Wx%A)^5)-((%Wx%A)^4)-((%Wx%A)^3))-((%Wx%A)^2)-(%Wx%A)-%Z=0"

needs to be solved for %A. Let's say the answer is 1.029

then

resubstitute for %A such:-

(1+(%X/100))=%A^10=1.029^10=1.330925505

so the APR is 33%!

Hence my question whether anyone had already coded it into VDS?!

Mac · Posted: Fri Jan 10, 2003 10:59 am Post subject:

Well, if the amount is 1000 and the interest is 10% with a
10 month payout... the APR is 12 percent. Wink

arcray · Posted: Fri Jan 10, 2003 12:48 pm Post subject:

In European law that is not quite the case, because after 1 month you only owe (1100-110) In other words just 990, but you are still paying interest on the full amount. Whereas you ought only to be paying interest on what is left owing.

The APR is meant to account for this by giving you the true interest rate paid on the diminishing principle. In other words the true interest rate is far higher; at least double the nominal flat rate.

Serge · Posted: Fri Jan 10, 2003 1:40 pm Post subject:

Hi arcray,

i'd like to see if i can help (being a maths teacher) but i need to understand exactly what it is that you are after. Can you give an example with a monthly account of payments...

For example, using the example you gave of 1000 over 10 months at 10%,
month 1 - interest is... and the amount owing is...
month 2 - interest is... and the amount owing is...

I need exact info as i could use compound interest or simple interest or interest on the full amount over the 10 months...

I can't promise to find the answer for you but i'll have a better chance if i understand very clearly what you are after.

Serge

arcray · Posted: Fri Jan 10, 2003 4:00 pm Post subject:

Hello Serge. Call me Andy.

OK!

Say you borrow 1000 over 10 months at an interest rate of 10% payable monthly. From the discussion above it would seem that people are happy with adding the interest at the beginning of the term and then paying back 10 installments of 110 paying a total of 100 in interest!

However if it were really a 10% interest rate then 1/12 (or 0.833%) of this should be charged against the outstanding principle at the end of every month. i.e. The Before column is what you owe at the end of each month. The after column is what you owe after you have paid your monthly installment and it is this that you should be charged interest on in the 2nd month and so on...

You'll have to excuse the columns not quite lining up. This BB does not have a Table style, but I did try!

Mac · Posted: Fri Jan 10, 2003 7:18 pm Post subject:

Sorry arcray,

I thought we were converting straight across - shoulda known
better than to answer anything complicated at 5:00 AM... Embarassed

Cheers, Mac Smile

Serge · Posted: Fri Jan 10, 2003 11:33 pm Post subject:

thanks for that andy - give me a few days to go through it and i'll see what i can do

Serge

Serge · Posted: Mon Jan 13, 2003 1:02 am Post subject:

Hi Arcray,

vds does not have the maths capabilities to deal with working out the apr as per the formulae mentioned at the web site you gave the link to.

there is a dll that seems to contain the maths necessary - the dll adds maths functions to vds and it costs about US$16

are you interested in purchasing that dll or is it not worth that sort of money?

by the way, the dll is called icemath.dll and can be downloaded from http://www.vdsworld.com/index.php?page=download&fileid=58

if you are interested in going the icemath way, let me know and i'll see what i can do about getting the code working for you

Serge

arcray · Posted: Wed Jan 15, 2003 6:01 am Post subject:

If we can get it to work, I would be happy to use the icemath.dll!

Mac · Posted: Wed Jan 15, 2003 6:19 am Post subject:

From what I've read, I think it can be done with an algorithm
loop in straight VDS. It's gonna hafta increment and check
itself for the correct rate on each month's declining balance
though. You can also do the exponentials in a loop.

I just haven't figured out exactly which values to check, the
algebraic symbols are greek to me (pun intended)... Laughing

Cheers, Mac Smile

vdsalchemist · Posted: Wed Jan 15, 2003 10:14 pm Post subject:

I agree with Mac on this. Andy if you can give us the definition of each numeric value then I am user we can figure this out for you. Basicly from the Math web-site that you posted where would you place the variables in the formula? We just need to speak on the same terms here. Actually how are you coming up with the Interest for the first month in the table that you posted

Serge · Posted: Thu Jan 16, 2003 12:51 am Post subject:

My understanding of vds functions is that it does not allow you to do things like:

Mac · Posted: Thu Jan 16, 2003 1:11 am Post subject:

ok - what would 10 to the power of 1/12 be?

10 x 10 x 1/12?

Never used fractional exponentials before...

Cheers, Mac Smile