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C#

Nancy Melucci
PLUS
Nancy Melucci
Courses Plus Student 36,143 Points
Posted by Nancy Melucci
Nancy Melucci
Courses Plus Student 36,143 Points

Loan Payment formula in C#

Writing a windows form application in C#. I've been given this formula to use to write the code to calculate loan payments...

                (loan amount x interest rate) /
             (1 - (1 / (1 + interest rate))term * 12)

I've made it into the formula below. But my monthly payment is off by 16 cents per month (compared to the example formula) and my total payoff amount is off by a few hundred dollars...

Does anyone out there have an example of a version that is likely to be more accurate?

   int term = yearsToPay * 12 * -1;

 payAmount = (amount * interest)/(1 - (Math.Pow(1 + interest, term)));

2 Answers

James Churchill
STAFF
James Churchill
Treehouse Teacher
James Churchill
James Churchill
Treehouse Teacher

Nancy,

I suspect that you're not calculating your rate of interest correctly, which is dependent on how often payments are to be made.

Here's a solution that I came up that seems to work accurately for monthly payments.

namespace LoanCalculator
{
    class Program
    {
        static void Main(string[] args)
        {
            var loanAmount = 10000;
            var interest = 5.0;
            var numberOfYears = 5;

            // rate of interest and number of payments for monthly payments
            var rateOfInterest = interest / 1200;
            var numberOfPayments = numberOfYears * 12;

            // loan amount = (interest rate * loan amount) / (1 - (1 + interest rate)^(number of payments * -1))
            var paymentAmount = (rateOfInterest * loanAmount) / (1 - Math.Pow(1 + rateOfInterest, numberOfPayments * -1));

            Console.WriteLine(paymentAmount);
        }
    }
}

Thanks ~James

Nancy Melucci
PLUS
Nancy Melucci
Courses Plus Student 36,143 Points
Nancy Melucci
Nancy Melucci
Courses Plus Student 36,143 Points

Thanks that worked. I am taking accounting but don't have much experience to this point with financial formulas.

I appreciate the help. I am looking forward to summer, when I plan to take more C# here at Treehouse.