Python for Finance

Time Value of Money
Example 1: >>>pv_f(0.1,1,100) # meanings of input variables
90.9090909090909 # based on their input order
>>>
Example #2 >>>pv_f(r=0.1,fv=100,n=1) # meanings based on keywords
90.9090909090909
Last but not least, a new learner could write his/her own financial calculator! For
more detail, see the Writing your own financial calculator written in Python section and
Appendix H.
From the preceding discussion, it is known that for the present value of annuity, the
following formula could be used:
In the preceding formula, we have four variables of pv, c, R, and n. To estimate a
present value, we are given c, R, and n. Actually, for any set of three values, we could
estimate the number 4. Let's use the same notations in SciPy and NumPy:
The four corresponding functions are: sp.pv(), sp.pmt(), sp.rate(), and
sp.nper(). Here is an example. John is planning to buy a used car with a price tag of
$5,000. Assume that he would pay $1,000 as the download payment and borrow the
rest. The annual interest rate for a car load is 1.9% compounded monthly. What is his
monthly payment if he plans to retire his load in three years? We could calculate the
monthly payment manually; see the following code:
>>> r=0.019/12
>>> pv=4000
>>> n=3*12
>>> pv*r/(1-1/(1+r)**n)
114.39577546409993
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