Financial: Savings plan calculation
05-16-2018, 09:11 AM
Post: #1
 cds Junior Member Posts: 5 Joined: Mar 2018
Financial: Savings plan calculation
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.
05-16-2018, 08:02 PM (This post was last modified: 05-17-2018 04:36 AM by cortopar.)
Post: #2
 cortopar Junior Member Posts: 31 Joined: May 2018
RE: Financial: Savings plan calculation
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.
05-21-2018, 04:49 PM
Post: #3
 KeithB Senior Member Posts: 507 Joined: Jan 2017
RE: Financial: Savings plan calculation
05-23-2018, 08:28 AM
Post: #4
 cds Junior Member Posts: 5 Joined: Mar 2018
RE: Financial: Savings plan calculation
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 ....
05-23-2018, 02:06 PM (This post was last modified: 05-23-2018 02:07 PM by KeithB.)
Post: #5
 KeithB Senior Member Posts: 507 Joined: Jan 2017
RE: Financial: Savings plan calculation
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.
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