Here's my solution:
irr.rb:
require 'algebra'
class IRR
def self.calculate(profits)
begin
function(profits).zero
rescue Algebra::MaximumIterationsReached => mir
nil
end
end
private
def self.function(profits)
Algebra::Function.new do |x|
sumands = Array.new
profits.each_with_index {|profit, index| sumands <<
profit.to_f / (1 + x) ** index }
sumands.inject(0) {|sum, sumand| sum + sumand }
end
end
end
puts IRR.calculate([-100, 30, 35, 40, 45])
puts IRR.calculate([-1, 1])
puts IRR.calculate([])
algebra.rb:
module Algebra
class MaximumIterationsReached < Exception
end
class NewtonsMethod
def self.calculate(function, x)
x - function.evaluated_at(x) / function.derivative_at(x)
end
end
class NewtonsDifferenceQuotient
def self.calculate(function, x, delta=0.1)
(function.evaluated_at(x + delta) -
function.evaluated_at(x) ).to_f / delta
end
end
class Function
attr_accessor :differentiation_method, :root_method, :maximum_iterations, :tolerance
def initialize(differentiation_method=NewtonsDifferenceQuotient,
root_method=NewtonsMethod, &block)
@definition = block
@differentiation_method, @root_method = differentiation_method,
root_method
@maximum_iterations = 1000
@tolerance = 0.0001
end
def evaluated_at(x)
@definition.call(x)
end
def derivative_at(x)
differentiation_method.calculate(self, x)
end
def zero(initial_value=0)
recursive_zero(initial_value, 1)
end
private
def recursive_zero(guess, iteration)
raise MaximumIterationsReached if iteration >=
@maximum_iterations
better_guess = @root_method.calculate(self, guess)
if (better_guess - guess).abs <= @tolerance
better_guess
else
recursive_zero(better_guess, iteration + 1)
end
end
end
end
Comments welcomed. Thanks,
On Feb 8, 9:01 am, Ruby Quiz <ja... / grayproductions.net> wrote:
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> -=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-3D-=-=
>
> by Harrison Reiser
>
> Internal Rate of Return (IRR -http://en.wikipedia.org/wiki/Internal_rate_of_return) is a common financial
> metric, used by investment firms to predict the profitability of a companyr
> project. Finding the IRR of a company amounts to solving for it in the equation
> for Net Present Value (NPV -http://en.wikipedia.org/wiki/Net_present_value),
> another valuable decision-making metric:
>
> N C_t
> NPV = ------------
> t=0 (1 + IRR)**t
>
> This week's quiz is to calculate the IRR for any given variable-length list of
> numbers, which represent yearly cash flows, the C_t's in the formula above: C_0,
> C_1, etc. (C_0 is typically a negative value, corresponding to the initialnvestment into the project.) From the example in the Wikipedia article
> (http://en.wikipedia.org/wiki/Internal_rate_of_return), for instance, you should
> be able to produce a rate of 17.09% (to four decimal places, let's say) from
> this or a similar command:
>
> irr([-100,+30,+35,+40,+45])
> => 0.1709...
>
> Keep in mind that an IRR greater than 100% is possible. Extra credit if you can
> also correctly handle input that produces negative rates, disregarding theact
> that they make no sense.