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+--- Thread: Financial: Savings plan calculation (/thread-10747.html)
Financial: Savings plan calculation - cds - 05-16-2018 09:11 AM
Dear all,
I struggle on an approach to solve the following financial calulation:
Given is a saveings plan with a fixed time t[yr], interest rate, static monthly investment and - here comes my issue - an annual bonus which depends on the annual invested money (and so is constant during the whole contract).
I'm now looking on a solution how to calculate the needed interestrate to achive the desired final capital at the end of the contract.
Without this "annual bonus" it is a no-brainer, but with I'm kind of stuck.
Any hints for me?
Regards
Carsten.
RE: Financial: Savings plan calculation - cortopar - 05-16-2018 08:02 PM
Pseudo Pascal-ish code for the brute force method...
Code:
EXPORT FindInterest(years,monthly,bonus,goal);
LOCAL interest:=0.001;
LOCAL increment:=0.002;
LOCAL i:=0;
LOCAL month:=0;
LOCAL balance:=0;
WHILE balance<goal DO
balance:=0;
FOR i:=1 to years DO
FOR month:=1 to 12 DO
balance:=balance+(balance * (interest / 12))+monthly;
END;
balance:=balance+bonus;
END;
interest:=interest+increment;
END;
RETURN interest;
END;Now this is going to return the interest at which balance exceeds goal. To get it exact would need additional processing at finer precision.
I’m sure there’s a formulaic way to solve this easier, but it exceeds my math abilities.
Edited to Prime-compliant HP-PPL. Tested on my Prime. It is slow as you’d expect. It could be sped up by providing or calculating a starting guess and larger increment before refining.
RE: Financial: Savings plan calculation - KeithB - 05-21-2018 04:49 PM
Sounds tailor-made for the spreadsheet.
RE: Financial: Savings plan calculation - cds - 05-23-2018 08:28 AM
Well,
an formularic approach would be exactely what I would be looking for.
I can't believe that this can only be solved by an iterative solution ....
RE: Financial: Savings plan calculation - KeithB - 05-23-2018 02:06 PM
Just use a separate calculation for the bonus compounded annually.
I.e. (compounded value of monthly payments) + (compounded value of bonus)
The reason to suggest the spreadsheet was for generality.