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Documentation Core Tools Interest Calculator

API Reference

Interest Calculator Tool

Experience the full-featured interest calculator tool with comprehensive compound interest calculations, investment planning, and financial analysis.

This document provides technical reference information for developers who want to understand the Interest Calculator's implementation or integrate similar functionality.

Core Calculation Function

Compound Interest Formula

The calculator implements the standard compound interest formula:

function calculateCompoundInterest(principal, rate, time, compoundFrequency) {
  // Convert annual rate to decimal
  const rateDecimal = rate / 100;

  // Calculate total amount
  const totalAmount =
    principal * Math.pow(1 + rateDecimal / compoundFrequency, compoundFrequency * time);

  // Calculate interest earned
  const totalInterest = totalAmount - principal;

  // Calculate return multiplier
  const multiplier = totalAmount / principal;

  // Calculate effective annual rate
  const effectiveRate = Math.pow(1 + rateDecimal / compoundFrequency, compoundFrequency) - 1;

  return {
    principal,
    totalAmount,
    totalInterest,
    multiplier,
    effectiveRate,
    timeInYears: time,
    compoundPeriods: compoundFrequency * time,
  };
}

Input Parameters

Required Parameters

ParameterTypeDescriptionRangeExample
principalNumberInitial investment amount> 010000
rateNumberAnnual interest rate (percentage)> 05.5
timeNumberTime period value> 010
timeUnitStringTime unit ('days', 'months', 'years')enum'years'
compoundFrequencyNumberCompounds per year1, 2, 4, 12, 36512

Time Unit Conversion

function convertTimeToYears(timeValue, timeUnit) {
  switch (timeUnit) {
    case 'days':
      return timeValue / 365;
    case 'months':
      return timeValue / 12;
    case 'years':
      return timeValue;
    default:
      throw new Error('Invalid time unit');
  }
}

Compound Frequency Options

const COMPOUND_FREQUENCIES = {
  ANNUALLY: 1,
  SEMI_ANNUALLY: 2,
  QUARTERLY: 4,
  MONTHLY: 12,
  DAILY: 365,
};

Return Values

Result Object Structure

{
  principal: number,           // Original investment amount
  totalAmount: number,         // Final amount (principal + interest)
  totalInterest: number,       // Interest earned
  multiplier: number,          // Growth multiplier (totalAmount / principal)
  effectiveRate: number,       // Effective annual rate (as decimal)
  timeInYears: number,         // Time period in years
  compoundPeriods: number      // Total number of compound periods
}

Example Response

{
  principal: 10000,
  totalAmount: 16470.09,
  totalInterest: 6470.09,
  multiplier: 1.647,
  effectiveRate: 0.051162,
  timeInYears: 10,
  compoundPeriods: 120
}

Validation Functions

Input Validation

function validateInputs(principal, rate, timeValue, timeUnit, compoundFrequency) {
  const errors = [];

  // Validate principal
  if (!principal || principal <= 0) {
    errors.push('Principal must be greater than 0');
  }

  // Validate rate
  if (!rate || rate <= 0 || rate > 100) {
    errors.push('Rate must be between 0 and 100');
  }

  // Validate time
  if (!timeValue || timeValue <= 0) {
    errors.push('Time must be greater than 0');
  }

  // Validate time unit
  if (!['days', 'months', 'years'].includes(timeUnit)) {
    errors.push('Time unit must be days, months, or years');
  }

  // Validate compound frequency
  if (![1, 2, 4, 12, 365].includes(compoundFrequency)) {
    errors.push('Invalid compound frequency');
  }

  return errors;
}

Formatting Functions

Currency Formatting

function formatCurrency(value, currency = 'USD', locale = 'en-US') {
  return new Intl.NumberFormat(locale, {
    style: 'currency',
    currency: currency,
    minimumFractionDigits: 2,
    maximumFractionDigits: 2,
  }).format(value);
}

Percentage Formatting

function formatPercentage(value, decimalPlaces = 4) {
  return (value * 100).toFixed(decimalPlaces) + '%';
}

Number Formatting

function formatNumber(value, decimalPlaces = 2) {
  return new Intl.NumberFormat('en-US', {
    minimumFractionDigits: decimalPlaces,
    maximumFractionDigits: decimalPlaces,
  }).format(value);
}

Storage Functions

History Management

class CalculationHistory {
  constructor(storageKey = 'interest-calculator-history') {
    this.storageKey = storageKey;
    this.maxEntries = 10;
  }

  save(calculation) {
    let history = this.getAll();

    // Add timestamp
    calculation.timestamp = new Date().toISOString();

    // Add to beginning of array
    history.unshift(calculation);

    // Limit entries
    if (history.length > this.maxEntries) {
      history = history.slice(0, this.maxEntries);
    }

    // Save to localStorage
    localStorage.setItem(this.storageKey, JSON.stringify(history));
  }

  getAll() {
    try {
      const stored = localStorage.getItem(this.storageKey);
      return stored ? JSON.parse(stored) : [];
    } catch (error) {
      console.error('Failed to load history:', error);
      return [];
    }
  }

  clear() {
    localStorage.removeItem(this.storageKey);
  }
}

Error Handling

Common Error Types

class CalculationError extends Error {
  constructor(message, code) {
    super(message);
    this.name = 'CalculationError';
    this.code = code;
  }
}

// Error codes
const ERROR_CODES = {
  INVALID_PRINCIPAL: 'INVALID_PRINCIPAL',
  INVALID_RATE: 'INVALID_RATE',
  INVALID_TIME: 'INVALID_TIME',
  INVALID_TIME_UNIT: 'INVALID_TIME_UNIT',
  INVALID_FREQUENCY: 'INVALID_FREQUENCY',
  CALCULATION_OVERFLOW: 'CALCULATION_OVERFLOW',
};

Error Handling Example

function safeCalculate(principal, rate, timeValue, timeUnit, compoundFrequency) {
  try {
    // Validate inputs
    const errors = validateInputs(principal, rate, timeValue, timeUnit, compoundFrequency);
    if (errors.length > 0) {
      throw new CalculationError(errors.join(', '), 'VALIDATION_ERROR');
    }

    // Convert time to years
    const timeInYears = convertTimeToYears(timeValue, timeUnit);

    // Perform calculation
    const result = calculateCompoundInterest(principal, rate, timeInYears, compoundFrequency);

    // Check for overflow
    if (!isFinite(result.totalAmount)) {
      throw new CalculationError('Calculation overflow', ERROR_CODES.CALCULATION_OVERFLOW);
    }

    return { success: true, result };
  } catch (error) {
    return { success: false, error: error.message };
  }
}

Performance Considerations

Optimization Tips

// Debounce calculations for real-time updates
function debounce(func, wait) {
  let timeout;
  return function executedFunction(...args) {
    const later = () => {
      clearTimeout(timeout);
      func(...args);
    };
    clearTimeout(timeout);
    timeout = setTimeout(later, wait);
  };
}

// Use debounced calculation for input events
const debouncedCalculate = debounce(performCalculation, 300);

Memory Management

// Limit history entries to prevent memory issues
const MAX_HISTORY_ENTRIES = 10;

// Clean up event listeners
function cleanup() {
  // Remove event listeners
  // Clear intervals/timeouts
  // Release references
}

Integration Examples

React Component Integration

import { useState, useEffect } from 'react';

function InterestCalculator() {
  const [inputs, setInputs] = useState({
    principal: '',
    rate: '',
    timeValue: '',
    timeUnit: 'years',
    compoundFrequency: 12,
  });

  const [result, setResult] = useState(null);

  useEffect(() => {
    if (inputs.principal && inputs.rate && inputs.timeValue) {
      const calculation = safeCalculate(
        parseFloat(inputs.principal),
        parseFloat(inputs.rate),
        parseFloat(inputs.timeValue),
        inputs.timeUnit,
        parseInt(inputs.compoundFrequency),
      );

      if (calculation.success) {
        setResult(calculation.result);
      }
    }
  }, [inputs]);

  // Component render logic...
}

Vue.js Integration

<script setup>
import { ref, computed, watch } from 'vue';

const principal = ref('');
const rate = ref('');
const timeValue = ref('');
const timeUnit = ref('years');
const compoundFrequency = ref(12);

const result = computed(() => {
  if (!principal.value || !rate.value || !timeValue.value) return null;

  const calculation = safeCalculate(
    parseFloat(principal.value),
    parseFloat(rate.value),
    parseFloat(timeValue.value),
    timeUnit.value,
    parseInt(compoundFrequency.value),
  );

  return calculation.success ? calculation.result : null;
});
</script>

Testing

Unit Test Examples

describe('Interest Calculator', () => {
  test('calculates simple compound interest correctly', () => {
    const result = calculateCompoundInterest(10000, 5, 10, 1);
    expect(result.totalAmount).toBeCloseTo(16288.95, 2);
    expect(result.totalInterest).toBeCloseTo(6288.95, 2);
  });

  test('handles monthly compounding', () => {
    const result = calculateCompoundInterest(10000, 5, 10, 12);
    expect(result.totalAmount).toBeCloseTo(16470.09, 2);
  });

  test('validates invalid inputs', () => {
    const errors = validateInputs(-1000, 5, 10, 'years', 12);
    expect(errors).toContain('Principal must be greater than 0');
  });
});

This API reference provides the foundation for understanding and implementing compound interest calculations with the same accuracy and features as the Interest Calculator tool.

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