Financial calculation using .NET: Part 1

• Download source code - 10.1 KB

Introduction

In the finance world, very often we need to do general financial calculation like interest calculation, regression analysis, internal rate of return, etc. .NET does not provide readymade functions for these standard financial functionalities. Building these functionalities from scratch is not a big thing but testing it end to end with different scenarios is a challenge. We will try to understand how we can reuse 'Financial' classes from the Microsoft.VisualBasic namespace. These functions are time tested and you do not need to code from scratch.

In this article, we will understand how we can calculate the future value for a given rate of interest, period, and monthly invested amount.

I have uploaded a sample source code which has a simple UI to calculate the future value.

I have been writing and recording a lot of architecture related videos on Design Patterns, UML, FPA estimation, C# projects, etc. You can watch my videos at http://www.questpond.com.

Understanding the future value fundamental

First, let’s understand how future values are calculated in the finance domain. Let’s say you have decided to invest for two years in some scheme. Let’s say the amount is 1000 (I am not thinking in terms of INR, $, or pounds) at a rate of interest of 10%. For the first month, you will invest 1000 with 10% interest; in the second month, you will get 1100. Now in second month, you invest 1000, so the total is 1000 + 1100. Now the rate of interest on 2100 is 210. So after two months, you will get 2310.

The above calculation is nothing but a future value calculation. This is available as a readymade function in the Microsoft.VisualBasic namespace. Once you import the namespace, you will get a Financial static class which has a FV function. This function takes in the rate of interest, number of months, and the amount per month. Once we give this, it calculates the value you will get after the defined period. I have wrapped the Financial.FV function in a class ClsFutureValue.

Click here to download the source code attached with this article to see how the FV function works. Below is the screenshot of the sample project:.

This article, along with any associated source code and files, is licensed under The Code Project Open License (CPOL)