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