␡
- Calculating Loan or Mortgage Payments
- Calculating a Loan Balance
- Calculating the Future Value of an Investment
- Calculating Required Investment Deposits
- Taking Inflation into Account
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Calculating Required Investment Deposits
A slightly different problem is when a person has a financial goal in mind and needs to know what it will take to get there. For example, if a couple thinks they'll need $60,000 for their child's education in 18 years, what do they have to put aside every year (assuming 8% annual interest)? Here's the general formula:
PMT = FV x IR / ((1 + IR)NP – 1)
Here's how it looks translated into JavaScript:
PMT = FV * IR / (Math.pow(1 + IR, NP) - 1)
Listing 4 shows you how to calculate the specific example given above.
Listing 4: Calculating Required Investment Deposits
<script language="JavaScript" type="text/javascript">
<!--
function required_deposits(FV, IR, NP) {
var PMT = FV * IR / (Math.pow(1 + IR, NP) - 1)
return round_decimals(PMT, 2)
}
function round_decimals(original_number, decimals) {
var result1 = original_number * Math.pow(10, decimals)
var result2 = Math.round(result1)
var result3 = result2 / Math.pow(10, decimals)
return (result3)
}
var future_value = 60000
var interest_rate = 0.08
var investment_term = 18
var annual_deposit = required_deposits(future_value, interest_rate,
investment_term)
alert("Future value:\t$" + future_value + "\n" +
"Annual interest rate:\t" + interest_rate * 100 + "%\n" +
"Investment term:\t" + investment_term + " years\n\n" +
"Annual deposit:\t$" + annual_deposit)
//-->
</script>