Computer Technology MSIS 22:198:605 Homework 1

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Beverly Jeffrey Foster
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1 Computer Technology MSIS 22:198:605 Homework 1 Instructor: Farid Alizadeh Due Date: Friday October 3, 2003 by midnight Submission: by See below for detailed instructions) last updated on September 25, 2003 Rules: Please note the following rules: 1. Assignments should be ed on or before the day and time they are due. 2. Late submission will result in loss of 25% of the points. 3. very important: It is not possible to pass this course if you miss more than one programming assignment regardless of your scores in other assignments or exams. 4. All programming projects should be submitted by . Put all the files including all the.java and all the.class and possible input or output files in a single.zip file. The file name should be in the following format: LastnameFirstnameHWno.zip. For example a student named John Smith submitting Home work number 1 will have his file named: SmithJohnHw1.zip. To get a zip archive file you can for instance download the PkZip software form You should your code as an attachment to me at alizadeh@andromeda.rutgers.edu, with subject line MSIS605 HW1, exactly. Any deviation from this may result in delay in grading your home work. 5. Every class that you define must be started with a comment that indicates your name, student ID number, the home work number and your address. For instance if John Smith is turning home work number 1 and as part of his home work he has defined a class named invest then this class will look something like this: 1

2 class invest{ // ame: John Smith // Student ID: // Home work no 1 // smith@somemachine.rutgers.edu... the rest of the program... 2

3 Calculating investment parameters The main purpose of this assignment is to write a Java program that calculates various entities associated with an investment. Here are the parameters you need to work with: 1. PV: is the present value. It refers to the amount invested now. If you are the investor or the lender, this number is negative. Thus if you are are lending some one $1000, then PV = is the annual of return on the investment. 3. n is the number of periods in a year. If the interest is compounded annually then n = 1; if quarterly then n = 4; if monthly then n = 12, and so on. 4. nper is the total span of the investments in periods. Thus if the span of investment is 3 years and interest is compounded quarterly then nper = 3 4 = PMT is the periodic cash flow; this number is positive for the investor or lender, and negative for the borrower. 6. FV is the future value. This is the value of the investment at then end, that is after nper periods. It is positive for the lender and negative for the borrower. These entities are related to each other via the formula FV = PV 1 + r ) nper PMT n 1 + r ) ) nper 1. 1) n r n The Program Your job is to write a single class named invest with several methods as follows: 1. the first method is static void getfv){ In this method you should program the formula given above and calculate and set the future value FV. You may assume that all other necessary variables are already set and only the FV is unknown. The only issue is that in the formula you need to raise a number to the power of another number. In Java to in order to calculate x = a b one needs to call the pow method of the Math class already available on Java standard API: 3

4 x=math.powa,b); It would be much better to save intermediate results in auxiliary variables. ) nper For instance you may save the result of 1 + in an auxiliary variable, say tmp. Then simply calculate FV = PV tmp PMT tmp 1). 2. The second method is static void getpmt){ From the formula above we can get a formula for PMT: ) nper FV + PV 1 + PMT = ) ) nper 2) Your method must use this formula and calculate the periodic payment. 3. The third method is static void getpv){ Again the First formula can be used to find present value in terms of other entities: [ ) )] nper FV + PMT n r PV = 4. The forth method is static void getper){ 1 + Here we first set tmp = 1 + Then solving for tmp we get ) nper 3) ) nper tmp = PMT PMT FV + PV 4

5 Then use the following formula to get nper: nper = logtmp) log ) 1 + Again to use the log function you need to invoke the log method of the Math class in Java. Thus x = logy) is written as x=math.logy); Also nper is supposed to be an integer and the result of the above calculation is not by any means guaranteed to be an integer. To alleviate this problem we first round up the result using the function Math.ceila). The result is a double. For instance Math.ceil3.2) is the double value 4.0. To turn this into an integer you need to cast it into integer: int)4.0 which results in int value Finally you need to write the main method. For this assignment the main method has to solve four different problems and output the results. You may code all four problems in the main method one after another. Here are the four problems: i. A firm invests $5,000,000 in a savings account in a bank for three years. The annual of interest is 5.25% and the interest is compounded quarterly. How much money is in the account at the end of the third year? The main program should output the result with a println statement. ii. A couple wishes to buy a house at $300,000. The bank requires that 20% of the price be paid in cash and the rest be financed on thirty year loan at 5.25% annual compounded monthly. Your main program should do the necessary calculations and find the monthly payment the couple has to pay to bank. iii. Another couple has just started shopping for a new car and they know they can afford at most $500 a month. The best annual interest available to them is 5.15% annual compounded monthly. The main method should determine and print the amount they can borrow for a year 6 year loan. iv. A retiree has $850,000 saved. He wants to invest this money in a certificate of deposit CD) paying 5.75% annual interest compounded monthly. The retiree expects to get $6,000 a month and would like to be left with $300,000 when he closes the account. For how many months should he leave his money on this CD? 5

1) Cash Flow Pattern Diagram for Future Value and Present Value of Irregular Cash Flows

Topics Excel & Business Math Video/Class Project #45 Cash Flow Analysis for Annuities: Savings Plans, Asset Valuation, Retirement Plans and Mortgage Loan. FV, PV and PMT. 1) Cash Flow Pattern Diagram for