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POCalculating annual percentage rate (need some help with inherited code)
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  1. POCalculating annual percentage rate (need some help with inherited code)
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    copied!<p>I'm making an application that gives clients and approximate loan offer (they are later calculated by other back-office systems). I have received some code from the financial firm that we are making the calculator for. My problem is that I do not understand the part of the code that calculates the annual percentage rate (including startup and monthly fees). </p> <p>It might be this method they are using, but I can't really tell: <a href="http://www.efunda.com/math/num_rootfinding/num_rootfinding.cfm#Newton_Raphson" rel="nofollow noreferrer">http://www.efunda.com/math/num_rootfinding/num_rootfinding.cfm#Newton_Raphson</a></p> <p>The code works correctly, but I really hate building an application on code that I don't fully understand and/or trust. The ultimate reply would be source-code which does the same thing, but with comments and understandable variable names (I'm not really excepting that :-) All ideas are welcome - maybe someone has a link to an article that explains it.</p> <p>(please note that I'm by no means a math or financial wiz)</p> <pre><code>[snip] int n = numberOfPayments; double a = (amount / (monthlyPayment * Math.Pow(n, 2)) - (monthlyPayment / amount)); double d = 0; if (a == 0) { d = 0; } else { for (int qq = 0; qq &lt; 20; qq++) { double b = amount + (monthlyPayment / a) * (1 - (Math.Pow((1 + a), -n))); double c = amount + (monthlyPayment / a) * ((n * (Math.Pow((1 + a), (-n - 1)))) - ((1 - (Math.Pow((1 + a), -n))) / a)); d = a - (b / c); double aa = a; double dd = d; a = d; if (Math.Abs(aa - dd) &lt; Math.Pow(10, -5)) { break; } } } double apr = ((Math.Pow((1 + d), 12)) - 1) * 100; apr = Math.Round(apr * 100) / 100; [/snip] </code></pre>
 

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