Bank Loan Using Compound Interest Formula

metadata.json

{"valueParameterInfo":[],"timeParameterDescriptions":[["Bank Deposit Deadline","Bank deposit deadline"],["Client Deposit Deadline","Client deposit deadline"]],"roleDescriptions":[],"contractType":"Other","contractShortDescription":"Unknown","contractName":"Unknown","contractLongDescription":"We couldn't find information about this contract","choiceInfo":[]}

playground.js

    /*
     * Simulates an auto loan for a used car with compound interest. Native token represents title for the car.
     * Credits to @johnshearing for providing this example in Haskell 
     * https://gist.github.com/johnshearing/79e4e10cf7ad5860a89c932780e65191
     */

    // PARAMS
    const bankDepositDeadline: Timeout = TimeParam("Bank Deposit Deadline")
    const clientDepositDeadline: Timeout = TimeParam("Client Deposit Deadline")

    // PARTIES
    const bank: Party = Role("Bank")
    const borrower: Party = Role("Borrower")

    // SETTINGS
    // Input loan amount, imagine the car costs 5000 ADA
    const loanAmount: SomeNumber = 5000000000
    // Input number of payments, imagine 36 monthly payments
    const numberOfPayments: SomeNumber = 36
    // Input interest rate in percent per year, this goes to the bank. e.g. 8%
    const interestPctPerYear: SomeNumber = 8

    /* Input the number of payments per year.
     * The formula compounds the interest every payment period. 
     * Monthly in this case but you can set it to whatever you want using the periods_per_year field.
     * We imagine monthly payments
     */
    const periodsPerYear: SomeNumber = 12

    /* Imagining a car loan smart contract in Marlowe for 5000 ADA as per the example found at the following link.
     * https://www.double-entry-bookkeeping.com/periodic-payment/auto-loan-payment/
     * paymentAmount = PV x i / (1 - 1 / (1 + i)^n)
     * PV = value of the auto loan (loanAmount)
     * n = number of months = 3 x 12 = 36
     * i = nominal rate = 8%/12 per month
     */

    const nominalRate: SomeNumber = (interestPctPerYear / 100) / periodsPerYear
    const paymentAmount: SomeNumber = loanAmount * nominalRate / (1 - 1 / (1 + nominalRate) ** numberOfPayments)

    // FUNCTIONS
    const bankDepositCarTitle = () =>
        Deposit(bank, bank, Token("e0d123", "Car Title"), Constant(1))

    const bankPayToClient = () => 
        Pay(bank, Party(borrower), Token("e0d123", "Car Title"), Constant(1), Close)

    const borrowerMakeDeposits = (i: number): Contract => {
        i--
        return When([
            Case(
                Deposit(bank, borrower, ada, Math.floor(paymentAmount)),
                // Recursive call, IF the borrower have pending deposits THEN make borrower make deposit ELSE make the final payments
                i > 0 ? borrowerMakeDeposits(i) : bankPayToClient()
            )
        ], clientDepositDeadline, Close)
    }

    const contract = (): Contract =>
        When([
            Case(
                bankDepositCarTitle(),
                borrowerMakeDeposits(numberOfPayments)
            )
        ], bankDepositDeadline, Close)

    return contract();

playground.marlowe.json

{}