lib/exonio/financial.rb in exonio-0.3.0 vs lib/exonio/financial.rb in exonio-0.4.0

@@ -109,7 +109,50 @@
       temp = (1 + rate) ** nper
       fact = (1 + rate * end_or_beginning) * (temp - 1) / rate
 
       -(fv + pmt * fact) / temp
     end
+
+    # Calculates the interest rate of an annuity investment based on
+    # constant-amount periodic payments and the assumption of a constant interest rate.
+    #
+    # @param nper [Integer] The number of payments to be made (number of periods)
+    # @param pmt [Float] The amount per period to be paid
+    # @param pv [Float] The present value
+    # @param fv [Float] The future value remaining after the final payment has been made
+    # @param end_or_begining [Integer] Whether payments are due at the end (0) or
+    #   beggining (1) of each period
+    # @param rate_guess [Float] An estimate for what the interest rate will be
+    #
+    # @return [Float]
+    #
+    # @example
+    #   Exonio.rate(12, 363.78, -3056.00) # ==> 0.05963422268883278
+    #
+    def rate(nper, pmt, pv, fv = 0, end_or_beginning = 0, rate_guess = 0.10)
+      guess = rate_guess
+      tolerancy = 1e-6
+      close = false
+
+      begin
+        temp = newton_iter(guess, nper, pmt, pv, fv, end_or_beginning)
+        next_guess = guess - temp
+        diff = (next_guess - guess).abs
+        close = diff < tolerancy
+        guess = next_guess
+      end while !close
+
+      next_guess
+    end
+
+    private
+
+    # This method was borrowed from the NumPy rate formula
+    # which was generated by Sage
+    #
+    def newton_iter(r, n, p, x, y, w)
+      t1 = (r+1)**n
+      t2 = (r+1)**(n-1)
+      ((y + t1*x + p*(t1 - 1)*(r*w + 1)/r) / (n*t2*x - p*(t1 - 1)*(r*w + 1)/(r**2) + n*p*t2*(r*w + 1)/r + p*(t1 - 1)*w/r))
+    end
   end
 end