Add equated_monthly_installments.py in Financials

financial/equated_monthly_installments.py

@@ -0,0 +1,54 @@
+"""
+Program to calculate the amortization amount per month, given
+- Principal borrowed (p)
+- Rate of interest per annum (r)
+- Years to repay the loan (y)
+
+Wikipedia Reference: https://en.wikipedia.org/wiki/Equated_monthly_installment
+"""
+
+
+def equated_monthly_installments(p: float, r: float, y: int) -> float:
+  """
+  Formula for amortization amount per month:
+  A = p * r * (1 + r)^n / ((1 + r)^n - 1)
+  where p is the principal, r is the rate of interest per month
+  and n is the number of payments
+
+  >>> equated_monthly_installments(25000, 0.12, 3)
+  830.3577453212793
+  >>> equated_monthly_installments(25000, 0.12, 10)
+  358.67737100646826
+  >>> installments(0, 0.12, 3)
+  Traceback (most recent call last):
+      ...
+  Exception: Principal borrowed must be > 0
+  >>> installments(25000, -1, 3)
+  Traceback (most recent call last):
+      ...
+  Exception: Rate of interest must be >= 0
+  >>> installments(25000, 0.12, 0)
+  Traceback (most recent call last):
+      ...
+  Exception: Years to repay must be an integer > 0
+  """
+  if p <= 0:
+      raise Exception("Principal borrowed must be > 0")
+  if r < 0:
+      raise Exception("Rate of interest must be >= 0")
+  if y <= 0 or not isinstance(y, int):
+      raise Exception("Years to repay must be an integer > 0")
+
+  # Yearly rate is divided by 12 to get monthly rate
+  rate_per_month = r_m = r / 12
+
+  # Years to repay is multiplied by 12 to get number of payments as payment is monthly
+  number_of_payments = n = y * 12
+
+  return p * r_m * (1 + r_m)**n / ((1 + r_m)**n - 1)
+
+
+if __name__ == "__main__":
+  import doctest
+
+  doctest.testmod()