c++ functions

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//This simple C++ program illustrates object oriented techniques for finance.
//Financial events are CLASSES with 5 members: Present Value, Future Value,
//Payment, Interest Rate and Number of Periods. The Present Value PV is the $
//amount deposited at Interest Rate R in order to obtain the Future Value FV
//while depositing a fixed payment PMT for the Number of Periods N.
//This class is best suited to perform calculation for an IRA type of
//scenario. For a simpler class that deals with CD type of deposits, take a
//look at the special case, and offspring class, Class0Pmt where payment =0.
//
#include <iostream.h> //cin and cout are tamer and better than printf, scanf
#include <math.h>     //need this for power, log and exp
#include <iomanip.h>  //need this for all the cool formatting of cout
#define MAXP 51       //max number of periods 50 years X 12 months + initial investment
#define NPAYS 26      //26 paychecks a year
#define MAXCF 51      //max number of cash flows for npv & irr
#define ZERO 10e-10   //tiny number for log and exp
#define EMPTY -1      //nothing assigned to a value that needs to be calc'ed
//financial events are classes
class Financial {
protected:
  double PV;         //present value
  double FV;         //future value      these guys are accessed only inside
  double IntRate;    //interest rate
  double NPer;       //number of periods
  double Pmt;        //periodic payment
public:
  Financial(double InPV, double InFV, double InIntRate, double InNPer, double InPmt);
  double GetPV() {
	 if (PV==EMPTY)
	 PV=FV/pow(1+IntRate,NPer)-Pmt/IntRate+Pmt/(IntRate*pow(1+IntRate,NPer));
	 return PV;
  }
  double GetFV() {
	 if (FV==EMPTY)
	 FV=(PV+Pmt/IntRate-Pmt/(IntRate*pow(1+IntRate,NPer)))*pow(1+IntRate,NPer);
	 return FV;
  }
  double GetNPer() {return NPer;}
  double GetIntRate() {return IntRate;}
  double GetPmt() {
	 if (Pmt==EMPTY)
	 Pmt=fabs(PV-FV/pow(1+IntRate,NPer))*(IntRate*pow(1+IntRate,NPer)/
		  (1-pow(1+IntRate,NPer)));
	 return Pmt;
  }
//function to display all members
//because of inheritance, this function can be used with all offspring classes
  void DispFin() {
	 cout
	 <<setiosflags(0x0100)      //always show decimal point
	 <<setiosflags(0x1000)      //always display in FIXED format
	 <<setprecision(2)          //2 decimals and line'm up.
	 <<setfill(' ')             //blanks for filler
	 <<setw(18)<<"Present Value:"    <<setw(11)<<fabs(GetPV())<<endl
	 <<setw(18)<<"Future Value:"     <<setw(11)<<fabs(GetFV())<<endl
	 <<setw(18)<<"Interest Rate:"    <<setw(11)<<fabs(GetIntRate()*100)<<endl
	 <<setw(18)<<"Number of Periods:"<<setw(11)<<fabs(GetNPer())<<endl
	 <<setw(18)<<"Payment:"          <<setw(11)<<fabs(GetPmt())<<endl;
 }

};
  //construct class by initializing with parameter values
  //the member functions calculate and return their own values
  //if value is EMPTY then it needs to be calcualted, else it's given
Financial::Financial(double InPV, double InFV, double InIntRate, double InNPer, double InPmt)
{
  PV=InPV; FV=InFV; IntRate=InIntRate;
  NPer=InNPer; Pmt=InPmt;
}

//This is a special case of the Financial class where PMT is 0.
//The most obvious application is the calculation of CD rates. In this case,
//financial events are CLASSES with 4 members: Present Value, Future Value,
//Interest Rate and Number of Periods. The Present Value PV is the $ amount
//deposited at Interest Rate R in order to obtain the Future Value FV after the
//Number of Periods N.

class Class0Pmt :public Financial {
public:
  Class0Pmt(double InPV, double InFV, double InIntRate, double InNPer);
  double GetPV() {if (PV==EMPTY) PV=FV/pow(1+IntRate,NPer); return PV;}
  double GetFV() {if (FV==EMPTY) FV=PV*pow(1+IntRate,NPer); return FV;}
//The number of periods and rate can be deduced algebraicly for this class
  double GetNPer() {
	 if (NPer==EMPTY) NPer=(log(FV)-log(PV))/log(1+IntRate);
	 return NPer;
  }
  double GetIntRate() {
	 if (IntRate==EMPTY)  IntRate=exp((log(FV)-log(PV))/NPer)-1;
	 return IntRate;
  }
  void DispFin() {
	 cout
	 <<setiosflags(0x0100)      //always show decimal point
	 <<setiosflags(0x1000)      //always display in FIXED format
	 <<setprecision(2)          //2 decimals and line'm up.
	 <<setfill(' ')             //blanks for filler
	 <<setw(18)<<"Present Value:"    <<setw(11)<<fabs(GetPV())<<endl
	 <<setw(18)<<"Future Value:"     <<setw(11)<<fabs(GetFV())<<endl
	 <<setw(18)<<"Interest Rate:"    <<setw(11)<<fabs(GetIntRate()*100)<<endl
	 <<setw(18)<<"Number of Periods:"<<setw(11)<<fabs(GetNPer())<<endl;
 }
};

Class0Pmt::Class0Pmt(double InPV, double InFV, double InIntRate, double InNPer) :Financial(InPV, InFV, InIntRate, InNPer, 0)
{
  PV=InPV; FV=InFV;
  IntRate=InIntRate; NPer=InNPer;
};



//calculate the future value of retirement plans if the periodic
//payments increase like in an RSP based on 6% or 9% of salary.
double CalcRSP(double pmt[], double rsp[], double r, double gr, int numy)
{
  int i;
  rsp[0]=pmt[0];   //rsp[0] is the initial investment
  for (i=1;i<=numy;i++) {
    if (i>1) pmt[i]=pmt[i-1]+(pmt[i-1]*gr/100);
	 //deposit 6% or 9% of paycheck every payday (26 a year)
	 Financial Retirement(rsp[i-1],-1,(r/100)/NPAYS,NPAYS,pmt[i]/NPAYS);
	 rsp[i]=Retirement.GetFV();
  }
  return rsp[numy];
}
//oh yeah. some recursion and pointers and passing by reference.
//function to calculate the rate of return of the RSP to acheive a target value
double CalcR(double pmt[], double rsp[], double *r,
         double *inc, double gr, int numy, double rspt)
{
  double tol,d1,d2;
  tol=fabs(pmt[0]/10000);  //this will grant precision past 3rd dec
  d1=rspt-CalcRSP(pmt,rsp,*r+*inc,gr,numy);
  cout<<setprecision(3)<<"@"<<*r+*inc
     <<"% the RSP="<<rspt-d1<<endl;
  if (*r+*inc>200) {
    cout<<"\nSorry - no solution between 0% and 200%\n";
	 return EMPTY;
  }
  else {
    if (fabs(d1)<=tol) return *r+*inc;
    else {
      d2=rspt-CalcRSP(pmt,rsp,*r,gr,numy);
      if (d2*d1<0) *inc /= 10;
      else *r +=*inc;
      return CalcR(pmt,rsp,r,inc,gr,numy,rspt);
    }
   }
}
//get stats calculate RSP and rates, display results
int RSP()
{
  int numy,     //number of years left to retirement
     i;
  double r,        //investment rate
       spct,     //% salary that goes to RSP
       gr,       //salary growth rate
       rspt,     //amount of rsp at end of time periods
       tpmt=0,   //total payments
		 inc,      //increments for recursive r calculation
       pmt[MAXP],//array of annual payments (they grow with the pay)
       rsp[MAXP];//value of rsp in any period, rsp[0] is initial investment

  cout<<"Number of years left 'till retirement (max "<<MAXP-1<<") : ";
  cin >>numy;
  if (numy>MAXP||numy<=0) {
    cout<<"You are a funny guy\n";
    return 1;
  }
  cout<<"Expected Rate of Return of the Retirement Plan : ";
  cin >>r;
  cout<<"Amount of the Startup Deposit (0 if you are starting now) : ";
  cin >>pmt[0];
  if (pmt[0]==0) pmt[0]=ZERO;
  if (pmt[0]<0) pmt[0] *= -1;
  cout<<"Current annual pay before taxes (gross income): ";
  cin>>pmt[1];                //this will be divided by rsp rate
  if (pmt[1]<=0) {
    cout<<"You are a funny guy\n";
	 return 1;
  }
  cout<<"Percent of gross income dedicated to RSP (usually 6 or 9%) : ";
  cin>>spct;
  pmt[1] =pmt[1]*(spct/100);
  cout<<"Expected growth rate of your gross income (enter 5 for 5% annual raises): ";
  cin>>gr;
  rspt=CalcRSP(pmt,rsp,r,gr,numy);
  cout<<setiosflags(0x0100)<<setiosflags(0x1000)
     <<setfill(' ')<<setprecision(2)<<"\nYear    Payment         RSP\n\n";
  for (i=0;i<=numy;i++) {
    cout<<setw(3)<<i<<setw(12)<<pmt[i]<<setw(12)<<rsp[i]<<endl;
    tpmt +=pmt[i];
  }
  cout<<setw(27)<<setfill('-')<<"-"<<endl                  //print ---------
     <<setfill(' ')<<setw(3)<<" "<<setw(12)<<tpmt<<setw(12)<<rspt<<endl
     <<setw(27)<<setfill('=')<<"="<<endl;                 //print =========
  cout<<"The amount of your RSP at retirement will be "<<rspt<<endl
     <<"Enter a target amount and I'll calculate the required rate of return."<<endl
     <<"Enter target amount : ";
  cin>>ws>>rspt;
  inc=10;r=ZERO-inc;
  if (CalcR(pmt,rsp,&r,&inc,gr,numy,rspt)==EMPTY)
    cout<<"Can't get to what you want with a rate between 0% and 200%\n";
  else cout<<"To achieve an RSP="<<setprecision(2)<<rspt
        <<" the required Rate of Return is "<<setprecision(3)<<r<<endl;
  return 1;
}

//calculate Net Present Value of a series of cash flows
double CalcNPV(double cf[], double pv[], double r, int numcf)
{  double npv;
  int i;
  npv=pv[0]=cf[0];   //cf[0] is the initial investment and doesn't discount
  for (i=1;i<=numcf;i++) {
	 Class0Pmt CashFlow(EMPTY,cf[i],r/100,i);
    pv[i]=CashFlow.GetPV();
    npv= npv+pv[i];
  }
  return npv;
}
//calculate Internal Rate of Return of a series of cash flows
//OOOOOOOoooooo recursion and passing by reference.
double CalcIRR(double cf[], double pv[], double *r, double *inc, int numcf)
{
  double tol,d1,d2;
  tol=fabs(cf[0]/10000);  //this will grant precision past 3rd decimal
  d1=CalcNPV(cf,pv,*r + *inc,numcf);
  cout<<setprecision(3)<<"@"<<*r+*inc
     <<"% Initial Investment - NPV of Cash Flows="<<d1<<endl;
  if (((*r+*inc)<0) || ((*r+*inc)>200)) {
    cout<<"\nSorry - no solution between 0% and 200%\n";
	 return EMPTY;
  }
  else {
    if (fabs(d1)<=tol) return *r+*inc;
    else {
      d2=CalcNPV(cf,pv,*r,numcf);
      if (d2*d1<0) *inc /= 10;
      else *r +=*inc;
		return CalcIRR(cf,pv,r,inc,numcf);
    }
   }
}
//get cash flows, calculate NPV and IRR, display results
int NpvIrr()
{
  char yn;
  int numcf,i;                 //cash flow[0] is the intial investment
  double r,npv,tcf,inc,irr,
       cf[MAXCF],pv[MAXCF];  //cash flows 1 .. 50 get discounted
  cout<<"Enter number of cash flows (exclude Initial Investment and max "
     <<MAXCF-1<<") : ";
  cin >>numcf;
  if (numcf>MAXCF) {
    cout<<"You weren't paying attention\n";
	 return 1;
  }
  cout<<"Enter the interest rate : ";
  cin >>r;
  cout<<"Enter the amount of the Initial Investment (outflow): ";
  cin >>cf[0];
  if (cf[0]>0) cf[0] *= -1;  //Initial Investment is ALWAYS an outflow
  tcf=cf[0];
  for (i=1;i<=numcf;i++) {
	 cout<<"Enter Cash Flow["<<i<<"] : ";
	 cin >>cf[i];
	 tcf +=cf[i];
  }
  cin.ignore(1);
  npv=CalcNPV(cf,pv,r,numcf);
  cout<<setiosflags(0x0100)<<setiosflags(0x1000)
	  <<setfill(' ')<<setprecision(2)<<"\nPer#  Cash Flow         NPV\n\n";
  for (i=0;i<=numcf;i++)
	 cout<<setw(3)<<i<<setw(12)<<cf[i]<<setw(12)<<pv[i]<<endl;
  cout<<setw(27)<<setfill('-')<<"-"<<endl                  //print ---------
	  <<setfill(' ')<<setw(3)<<" "<<setw(12)<<tcf<<setw(12)<<npv<<endl
	  <<setw(27)<<setfill('=')<<"="<<endl;                 //print =========
  cout<<"Would you like to calculate the Internal Rate of Return (Y/N) : ";
  cin>>ws>>yn;
  cin.ignore(1);
  if (yn=='y' || yn=='Y') {
	 r=0;inc=10;irr=CalcIRR(cf,pv,&r,&inc,numcf);
	 if (irr!=EMPTY) cout<<"\nInternal Rate of Return="<<setprecision(3)<<irr<<endl;
  }
  return 1;
}

//give some help
void HelpMsg()
{
cout
<<"\nThis simple C++ program illustrates object oriented programming techniques for"
<<"\nfinance. Financial events are CLASSES with 5 members: Present Value, Future"
<<"\nValue, Interest Rate, Number of Periods and Payment. Idiot proofing and"
<<"\nfeatures have been kept to a minimum to avoid obfuscating the code. Please feel"
<<"\nfree to make any changes you want. If you have suggestions or improvements,"
<<"\nwrite me a note: Eddy Vasile, PO Box 71313, LA, CA 90071 or"
<<"\n70451,3333@CompuServe."
<<"\n\nThe Present Value PV is the $ amount deposited at Interest Rate R in order to"
<<"\nobtain the Future Value FV after the Number of Periods N while paying Payment"
<<"\nPMT. In order to calculate any member, the other 4 must be known in order to "
<<"\nsatisfy the formula PV=FV/(1+R)^N-PMT/R+PMT/(R*(1+R)^N). Example: you start an"
<<"\nIRA with an initial deposit of $8,000 with a fixed interest rate of 7% for 30"
<<"\nyears and you make regular annual deposits of $1,500. Choose the Future Value"
<<"\ncalculation to see the value of your savings at the end of the 30 years. You"
<<"\nwill receive the prompt \"Enter PV R N and PMT:\" Respond by entering 8000 7 30"
<<"\n1500. The result is $202,589. You were hoping that it would be around $500,000."
<<"\nSince you can't change the interest rate or the annual deposits, you'd like to"
<<"\nsee what the initial deposit amount (PV) should be in order to have the"
<<"\n$500,000 FV. Choose the Present Value calculation and you'll see that you need"
<<"\n$47,070. You still want $500,000 but you can only deposit $8,000. Choose the"
<<"\nPayment Calculation and you'll see that you need to change your annual payments"
<<"\nto $4,649.\nPress return to continue..";cin.get();
cout
<<"\nThis is very steep. However, if you have a retirement savings plan"
<<"\n(RSP) at work, you know that the regular payment is a percentage (6% - 9%) of"
<<"\nyour income before taxes. Thus, the payments increase in size along with your"
<<"\nsalary. Choose the option \"Retirement Plan With Annual Raises.\" Your Present"
<<"\nValue or Initial Investment is still $8,000, the number of years to retirement"
<<"\nis 30 and you expect the Rate of Return of the Plan to be around 7%. If you"
<<"\nintend to contribute 6% of your $50,000 annual income to the RSP and you expect"
<<"\nyour salary to grow at 5%, after 30 years, your RSP will be worth $594,343."
<<"\nThe program assumes that you get paid 26 times a year and it compounds as such."
<<"\n\nSuppose you expected around $1,000,000. When the program prompts for the"
<<"\nexpected value, enter 1000000. The calculation will show that your plan needs"
<<"\nto perform at a 9.729% Rate of Return to achieve that amount."
<<"\nThe equation PV=FV/(1+R)^N-PMT/R+PMT/(R*(1+R)^N) has important special cases."
<<"\nIf the Future Value is zero, then the Present Value is the amount of a loan"
<<"\n(principal) and the payments are the amortization payments. If you intend to"
<<"\ncalculate an annual loan payment, choose the Payment Calculation option and"
<<"\nenter ZERO for the future value. If you want to calculate the monthly payment,"
<<"\nenter the the interest divided by 12 (monthly interest) and the number of years"
<<"\nmultiplied by 12. Another important special case is when the payment=0. This is"
<<"\nencountered in the case of a CD when one makes a deposit at an interest rate"
<<"\nfor a number of years without subsequent payments. The equation is now:"
<<"\nFV=PV*(1+R)^N.\nPress return to continue..";cin.get();
cout
<<"\nConsider now the special case where there is NO periodic payment."
<<"\nThis offspring CLASS has 4 members: Present Value, Future Value,"
<<"\nInterest Rate and Number of Periods. The Present Value PV is the $ amount"
<<"\ndeposited at Interest Rate R in order to obtain the Future Value FV after the"
<<"\nNumber of Periods N. In order to calculate any member, the other 3 must be"
<<"\nknown in order to satisfy the formula FV-PV(1+R)^N=0."
<<"\nR and I are derived by exponentiating (1+R)^N=FV/PV. Choose the calculation"
<<"\nyou want and enter the requested values. Example: choose the Future Value"
<<"\nCalculation. You will be prompted: 'Enter PV R and N :' Enter 5000 6.75 3 to"
<<"\ncalculate the Future Value of a $5,000 deposit @6.75% for 3 years. The result"
<<"\nis $6,082.38. To compound interest monthly, enter N as 36 (3 X 12) and R as"
<<"\n0.563 (monthly interest = 6.75/12). FV is now $6,119.92. This is useful if you"
<<"\nwant to calculate the YIELD of a CD. Now that you know the monthly compounded"
<<"\nFV, choose the Interest Calculation and enter 5000 6119.92 3. The YIELD is"
<<"\n6.97%. Modify the source code to compound weekly or daily."
<<"\nPress return to continue..";cin.get();
cout
<<"\nNet Present Value compares the value of an investment to a straight deposit."
<<"\nAll payments (outflows of cash) must be entered as negative numbers. Cash"
<<"\ninflows (payments to you) are entered as positive numbers. Example: You could"
<<"\nbuy a rental property for 160,000 and manage it for 5 years or deposit the"
<<"\nmoney for 5 years at 8.5%. Choose the NPV calculation and enter 5 for the"
<<"\nnumber of cash flows and 8.5 for interest. Enter -160000 for the initial"
<<"\ninvestment followed by the forecasted 5 year cash flows: -5000 1st year (a"
<<"\nloss due to repairs and vacancy), 5500 2nd (a gain), 6500 3rd, 4500 4th and"
<<"\nyou sell it in the 5th for 240000. The NPV of these cash flows is 8,010.60."
<<"\nThus, investing in the rental brings in MORE money than depositing it at 8.5%."
<<"\nIn other words, the 5 cash flows achieve at least the targeted return of 8.5%."
<<"\nThe break-even interest rate is called the Internal Rate of Return. Rates"
<<"\nhigher higher than IRR would mean that depositing the money is a better"
<<"\ninvestment. Try the same NPV at 12%. You'll see that the cash flows do not"
<<"\nachieve that return. The IRR can be calculated through iterations. My"
<<"\nalgorithm searches the solution by trying incremental rates and then refining"
<<"\nthe increments until a suitable solution is found between 0% and 200%."
<<"\nPress return to continue..";cin.get();
}
//menu of choices
int menu()
{                //keep it simple or obfuscate C++ code
  double         //also makes it portable
	 p=EMPTY,        //pv                 | When you start, all are unknown, or
	 f=EMPTY,        //fv                 | -1. Thus, if you miss initializing
	 r=EMPTY,        //interest rate      | the program crashes(ln(EMPTY)) without
	 n=EMPTY,        //number of periods  | returning bogus nums. Put in checks
	 t=EMPTY;        //payment            | yourself
  char choice;
  cout <<endl
      <<"Calculations for the general financial class (IRA or RSP)\n"
      <<"=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=Eddy's Tools=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=|\n"
      <<"|1 PV   Present Value Calculation    |2 FV   Future Value Calculation         |\n"
      <<"|3 PMT- Payment Calculation          |4 Retirement Plan With Annual Raises    |\n"
      <<"|-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=\n\n"
      <<"\nCalculations for special case where PMT=0 (CD)\n"
      <<"=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=Eddy's Tools=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=|\n"
      <<"|5   PV      Present Value Calc          |6   FV   Future Value Calculation   |\n"
      <<"|7   N       Number of Periods Calc      |8   R    Interest Rate Calculation  |\n"
      <<"|9   NPV/IRR Internal Rate/Net Pres Value|                                    |\n"
      <<"|0   Exit the program                    |?   Help Brief Tutorial             |\n"
      <<"=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=\n\n";
  cout <<"Choose one of the above  : ";
  cin >> ws >> choice; cin.ignore(1);          //ws sucks out blanks
  switch (choice) {
    case '1': cout<<"Present Value Calculation; Enter FV R N and PMT: ";
           cin >> f >> r >> n >>t;
	   cin.ignore(1);
           f=fabs(f);n=fabs(n);t=fabs(t);
           break;
    case '2': cout<<"Future Value Calculation; Enter PV R N and PMT: ";
           cin >> p >> r >> n >>t;
	   cin.ignore(1);
           p=fabs(p);n=fabs(n);t=fabs(t);
           break;
    case '3': cout<<"Periodic Payment Calculation; Enter PV FV R and N: ";
           cin >> p >> f >> r >>n;
	   cin.ignore(1);
           p=fabs(p);f=fabs(f);n=fabs(n);
           break;
    case '4': RSP();cin.ignore(1);break;
    case '5': cout<<"Present Value Calculation; Enter FV R and N : ";
			  cin >> f >> r >> n;
		cin.ignore(1);
			  break;
	 case '6': cout<<"Future Value Calculation; Enter PV R and N : ";
			  cin >> p >> r >> n;
		cin.ignore(1);
			  break;
	 case '7': cout<<"Number of Periods Calculation; Enter PV FV and R : ";
			  cin >> p >> f >> r;
		cin.ignore(1);
			  break;
	 case '8': cout<<"Interest Rate Calculation; Enter PV FV and N : ";
			  cin >> p >> f >> n;
		cin.ignore(1);
			  break;
	 case '9': NpvIrr();break;
	 case '?': HelpMsg();return 1;
	 case '0': cout<<"Bye\n";return 0;
	 default : cout<<"Pardon?";choice='?';break;
  }
  if (choice<'4') {
	 if (p==0) p=ZERO;  // in case they check a mortgage or
	 if (f==0) f=ZERO;  // current value of an investment (modified pv)
	 if (t==0) t=ZERO;  //
	 r=fabs(r/100);
	 Financial Calculation(p,f,r,n,t);
	 Calculation.DispFin();
	 return 1;
  }
  if (choice>'4' && choice<'9') {
	 if (r!=EMPTY) r=r/100;
	 if ((choice=='7'||choice=='8') && (p<=0||f<=0)) {
		cout<<"This algorithm is based on exponentiation. You may not have present or future\n"
			<<"values < or = 0. DO NOT make the present value negative to show outflows\n";
		return 1;
	 }
	 Class0Pmt Calc0Pmt(p,f,r,n);
	 Calc0Pmt.DispFin();
	 return 1;
  }
  return 1;
}

void main()
{
  while (menu());
}