[ https://issues.apache.org/jira/browse/FINERACT-2062?page=com.atlassian.jira.plugin.system.issuetabpanels:comment-tabpanel&focusedCommentId=17825572#comment-17825572 ]
Kigenyi Wilfred commented on FINERACT-2062: ------------------------------------------- Yes the math is correct. An example of a loan is here: Principal Amount is 1000 Interest Rate is 2% per month and repayment frequency is 4 weeks. > Use 48 weeks in a year when interest rate is per month > ------------------------------------------------------ > > Key: FINERACT-2062 > URL: https://issues.apache.org/jira/browse/FINERACT-2062 > Project: Apache Fineract > Issue Type: Improvement > Components: Loan > Affects Versions: 1.9.0 > Reporter: Kigenyi Wilfred > Priority: Minor > Fix For: 1.10.0 > > > Given that the interest rate period on a loan is monthly and client has > chosen to make weekly repayments, it makes more sense to assume that there > are 4 weeks in the month and 12 months in the year which comes to 48 weeks > rather than assuming the traditional 52 weeks in the year. > For example if a loan has a flat interest rate of 2% Per month and the > principal is 1000 and the repayments are weekly, weekly interest is currently > computed as follows: > interest per week = (0.02*12*1000)/52 = 4.61538 > it would make more sense if interest per month is computed as follows: > interest per week = (0.02*12*1000)/48 = 5 > > In other words there is no need for computing weeks in a year when we are > dealing with a month. There are 4 weeks in a month and this assumption > calculates a more reasonable figure as compared to when we compute weeks in > year. -- This message was sent by Atlassian Jira (v8.20.10#820010)