Problem Summary and Equations

Money can be invested, in order to earn interest. Compound interest is interest added to the initial deposit, so that the added interest also earns interest from then on. This addition of interest to the principal is called compounding. But different investments compound interest at different time. Some compound interest daily, some monthly, some quarterly and some annually.

For example:

Compounding of an initial investment of 1000.00 yearly for 3 years at 4% annual interest.

Calculate 4% of the current balance at the end of each year:

End of year 1: 1000.00 + 40.00 = 1040.00

End of year 2: 1040.00 + 41.60 = 1081.60

End of year 3: 1081.60 + 43.26 = 1124.86

Total earnings = 124.86

Compounding of an initial investment of 1000.00 quarterly for 3 years at 4% annual interest.

Calculate 1/4th of 4% of the current balance (i.e. 1%) at the end of each quarter:

End of quarter 1 in year 1: 1000.00 + 10.00 = 1010.00

End of quarter 2 in year 1: 1010.00 + 10.10 = 1020.10

End of quarter 3 in year 1: 1020.10 + 10.20 = 1030.30

End of quarter 4 in year 1: 1030.30 + 10.30 = 1040.60

End of quarter 1 in year 2: 1040.60 + 10.41 = 1051.01

End of quarter 2 in year 2: 1051.01 + 10.51 = 1061.52

End of quarter 3 in year 2: 1061.52 + 10.62 = 1072.14

End of quarter 4 in year 2: 1072.14 + 10.72 = 1082.86

End of quarter 1 in year 3: 1082.86 + 10.83 = 1093.69

End of quarter 2 in year 3: 1093.69 + 10.94 = 1104.63

End of quarter 3 in year 3: 1104.63 + 11.05 = 1115.68

End of quarter 4 in year 3: 1115.68 + 11.16 = 1126.84

Total earnings = 126.84

You will write a program to compare the earnings from annually compounded interest (i.e. figured and added to the balance annually) to earnings from interest that is compounded quarterly, monthly, or daily.

This program will contain two classes, in two separate files within your project:

-An Investment class to define the data fields and methods for an Investment object, containing:

- Six data fields

- A constructor method to create an Investment object (with parameters).

-Two getter methods to get two data field values.

- A method to calculate the investment results: the end balance and earnings.

-A method to display the conditions and results for an investment.

- The main Investment Comparison class, minimally containing:

-Four static methods to read and validate user input.

- A main method to display the program description, read the inputs from the user, create Investment objects, call other methods for calculating and displaying the results, and finally display a comparison analysis.

- The break statement may be used only to terminate a series of statements within a case of the switch statement. The break statement may never be used to terminate a loop.

-The continue statement may not be used anywhere within your code.

-A return statement will never be used to exit a loop.

-An exit call will never be used to exit a loop. The only exception to this rule is when an exit() statement is used to end a program due to an error that would prevent its execution.

Program Requirements

2. Within the project, create an Investment class with the following data fields:

-initial investment (dollars and cents)

-annual interest rate (percent, e.g. 3.5)

-term (amount of time money will be invested) in whole years

-compounding type (char A, Q, M, or D)

- balance (dollars and cents)

-earnings (dollars and cents)

Within the Investment class:

-Add a constructor with 4 parameters to instantiate an Investment type object and initialize all of the data fields.

- Set the first 4 data fields directly, using the passed in parameter values.

- Set the balance data field to the same value as the initial investment.

- Set the earnings data field to 0.

Results for annual compounding:

For an initial investment of $ 5555.55 after 5 years at 5.500% the ending balance is $ 7260.88

for earnings of $ 1705.33

- Add a getter for the earnings data field that returns the earnings value.

-Add a convertCompoundingTypeToString instance method. The method will:

-Return a String equivalent for the compounding type character data field (i.e. Annual, Quarterly, Monthly, or Daily).

-Add an instance method to calculate the investment results for an Investment object.

-Create a new variable to hold the converted annual interest rate -- a rate that can be used in math formulas (e.g. 3.5% would convert to 0.035).

-Decide which compounding rate to use by examining the compounding rate data field, and set up any necessary variables accordingly.

- Use a for loop to compute the end balance. (NOTE: You must use a loop, NOT banking interest formulas).

Interest earned must be calculated and added to the balance for each compounding period.

-Calculate annual interest on the current balance using the annual interest rate. Add interest to the balance every year.

- Calculate quarterly interest on the current balance using a quarterly interest rate (1/4th of the annual interest rate). Add interest to the balance every quarter for 4 quarters per year.

-Calculate monthly interest on the current balance using a monthly interest rate (1/12th of the annual interest rate). Add interest to the balance every month for 12 months per year.

-Calculate daily interest on the current balance using a daily interest rate (1/365th of the annual interest rate). Add interest to the balance every day for 365 days per year.

NOTE: You should not have separate loops for each different compounding period. Instead, figure out how to modify the loop variables to work for whichever period you are compounding.

- After calculating the end balance, store the correct value into the earnings data field. The earnings for an investment are the difference between the end balance and the initial investment.

-Add an instance method to display the investment results for an Investment object, as shown:

-Display a blank line before the results.

-Display a descriptive word (Annual, Quarterly, Monthly or Daily) in the description on the top line. HINT: Use your convert method.

- Display dollar figures to 2 decimal places, and interest rates to 3 decimal places.

- Dollar signs and decimal points of the dollar values should line up.

Compare Annual Compounding to:

Q - Quarterly Compounding M - Monthly Compounding D - Daily Compounding E - Exit Program Enter choice from Menu above: m

2. Create an Investment Comparison class that will contain a main method.

Within the Investment Comparison class:

-Create three separate static methods to read and return a valid value for each user input (initial investment, annual interest rate, and term years).

- Error check each of the above items is valid, using loops.

- All three values must be at least 1. Define this amount as a class level constant.

- Initial investment cannot be more than $500,000.00.

-Annual interest cannot be more than 30%.

- Terms can be up to (and including) 75 years.

-Valid value upper limits for all items should be stored as local constant values.

-For each item, within its method, loop and re-prompt the user until a valid value is entered. All error messages will use the constants to tell the user what values are valid.

-Create another static method to read and return a valid compounding type choice from the user.

- Let the user choose from a menu which compounding type will be compared to annual compounding (choices are: compounded quarterly, monthly, or daily).

- A fourth menu choice, exit the program, should be included on the menu.

- Loop, displaying the menu and reading the user choice, until the user enters a valid choice from the menu.

- Create a main method that will:

Display a description of what the program will do, for the user.

Loop:

- Call the method to read the compounding choice from the user (sample shown).

Unless the user chooses to Exit, continue:

-Call the methods to ask the user for the initial investment, annual interest rate, and term years, and store the returned results.

-Call the constructor to create two different objects of the Investment class type.

Both objects will have the same initial investment, annual interest rate, and term years. But they will have different compounding periods.

-The first Investment object will be created to use annual compounding.

- The second Investment object will be created to use the compounding type chosen by the user from the menu.

Compounding Analysis: You would earn $ 48.58 more with Monthly compounding vs. Annual compounding.

Press ENTER to continue...

For each object, call the instance method that will calculate its investment results.

For each object, call the instance method that will display its investment results.

Display a blank line.

Using whatever code is necessary, display the difference in the investment results, and then pause, as follows:

When the user presses ENTER to continue, the program will loop and re-display the menu.

-Continue looping and re-running the program, until the user chooses EXIT from the menu.

- The program should ONLY exit when the user chooses EXIT from the menu. Do NOT ask the user if s/he wishes to run the program again just redisplay the menu each time until EXIT is chosen.

3. The program must follow the CS210 Coding Standards from Content section 6.10.

Be sure to include the following comments:

-Comments at the top of each code file describing what the class does

- Include tags with the authors name (i.e. your full name) and the version of the code (e.g. version 1.0, Java Assn 4)

-Comments at the top of each method, describing what the method does

- Include tags with names and descriptions of each parameter and return value.