Spec for finance lease

finance_lease_calculator_spec.rb

class LeaseLiability
  attr_reader :year, :fixed_payment, :annual_increase, :discount_rate, :initial_direct_cost,
              :cash_incentives
  attr_accessor :beginning_balance

  def initialize(
    year:,
    fixed_payment:,
    annual_increase:,
    discount_rate:,
    initial_direct_cost:,
    cash_incentives:
  )

    @year = year
    @fixed_payment = fixed_payment
    @annual_increase = annual_increase
    @discount_rate = discount_rate
    @initial_direct_cost = initial_direct_cost
    @cash_incentives = cash_incentives
  end

  def ending_balance
    (beginning_balance + interest_expense - lease_payment).round(2)
  end

  def interest_expense
    beginning_balance * discount_rate
  end

  def lease_payment
    (fixed_payment * (1 + annual_increase)**(year - 1)).round(1)
  end

  def pv_lease_payment
    (lease_payment / (1 + discount_rate)**year).round(1)
  end
end

class RouAsset
  attr_accessor :beginning_balance, :asset_amortization, :ending_balance

  def initialize(year:)
    @year = year
  end
end

class FinanceLeaseCalculator
  def initialize(years:, fixed_payment:, annual_increase:, discount_rate:,
                 initial_direct_cost:, cash_incentives:)
    @years = years

    @lease_liabilities = years.reduce({}) do |acum, year|
      lease_liability = LeaseLiability.new(
        year: year,
        fixed_payment: fixed_payment,
        annual_increase: annual_increase,
        discount_rate: discount_rate,
        initial_direct_cost: initial_direct_cost,
        cash_incentives: cash_incentives
      )
      @initial_direct_cost = initial_direct_cost
      @cash_incentives = cash_incentives

      acum.merge(year => lease_liability)
    end
    calculate_ll_beginning_balances

    @rou_assets = years.reduce({}) do |acum, year|
      acum.merge(year => RouAsset.new(year: year))
    end
    calculate_rou_asset_values
  end

  def lease_liability(year:)
    @lease_liabilities[year]
  end

  def total_lease_payment
    @lease_liabilities.values.map(&:lease_payment).reduce(&:+)
  end

  def total_pv_lease_payment
    @lease_liabilities.values.map(&:pv_lease_payment).reduce(&:+).round(0)
  end

  def rou_asset(year:)
    @rou_assets[year]
  end

  private

  attr_reader :initial_direct_cost, :cash_incentives

  def calculate_ll_beginning_balances
    next_beginning_balance = total_pv_lease_payment
    @lease_liabilities.each_value do |ll|
      ll.beginning_balance = next_beginning_balance
      next_beginning_balance = ll.ending_balance
    end
  end

  def calculate_rou_asset_values
    next_beginning_balance = total_pv_lease_payment + initial_direct_cost - cash_incentives
    number_of_periods = @years.size
    @rou_assets.each_value do |rou_asset|
      rou_asset.beginning_balance = next_beginning_balance
      rou_asset.asset_amortization = rou_asset.beginning_balance / number_of_periods
      rou_asset.ending_balance = rou_asset.beginning_balance - rou_asset.asset_amortization

      next_beginning_balance = rou_asset.ending_balance
    end
  end
end

describe FinanceLeaseCalculator do
  it "receives" do
    lc = FinanceLeaseCalculator.new(
      years: 1..5,
      fixed_payment: 15_000,
      annual_increase: 0.025, # percentage
      discount_rate: 0.065, # percentage
      initial_direct_cost: 750,
      cash_incentives: 2_500
    )

    first_lease_liability = lc.lease_liability(year: 1)
    expect(lc.total_lease_payment).to eq(78_845.0)
    expect(lc.total_pv_lease_payment).to eq(65_328.0)

    expect(first_lease_liability.beginning_balance).to eq(65_328.0)
    expect(first_lease_liability.interest_expense).to eq(4_246.32)
    expect(first_lease_liability.lease_payment).to eq(15_000)
    expect(first_lease_liability.pv_lease_payment).to eq(14_084.5)
    expect(first_lease_liability.ending_balance).to eq(54_574.32)

    first_rou_asset = lc.rou_asset(year: 1)
    expect(first_rou_asset.beginning_balance).to eq(63_578.00)
    expect(first_rou_asset.asset_amortization).to eq(12_715.00)
    expect(first_rou_asset.ending_balance).to eq(50_863)
  end
end

operating_lease_calculator.rb

class LeaseLiability
  attr_reader :year, :fixed_payment, :annual_increase, :discount_rate, :initial_direct_cost,
              :cash_incentives
  attr_accessor :beginning_balance

  def initialize(
    year:,
    fixed_payment:,
    annual_increase:,
    discount_rate:,
    initial_direct_cost:,
    cash_incentives:
  )

    @year = year
    @fixed_payment = fixed_payment
    @annual_increase = annual_increase
    @discount_rate = discount_rate
    @initial_direct_cost = initial_direct_cost
    @cash_incentives = cash_incentives
  end

  def ending_balance
    (beginning_balance + liability_accretion - lease_payment).round(2)
  end

  def liability_accretion
    beginning_balance * discount_rate
  end

  def lease_payment
    (fixed_payment * (1 + annual_increase)**(year - 1)).round(1)
  end

  def pv_lease_payment
    (lease_payment / (1 + discount_rate)**year).round(1)
  end
end

class RouAsset
  attr_accessor :beginning_balance, :ending_balance, :lease_cost, :asset_reduction

  def initialize(year:)
    @year = year
  end
end

class OperatingLeaseCalculator
  def initialize(years:, fixed_payment:, annual_increase:, discount_rate:,
                 initial_direct_cost:, cash_incentives:)
    @years = years

    @lease_liabilities = years.reduce({}) do |acum, year|
      lease_liability = LeaseLiability.new(
        year: year,
        fixed_payment: fixed_payment,
        annual_increase: annual_increase,
        discount_rate: discount_rate,
        initial_direct_cost: initial_direct_cost,
        cash_incentives: cash_incentives
      )
      @initial_direct_cost = initial_direct_cost
      @cash_incentives = cash_incentives

      acum.merge(year => lease_liability)
    end
    calculate_ll_beginning_balances

    @rou_assets = years.reduce({}) do |acum, year|
      acum.merge(year => RouAsset.new(year: year))
    end
    calculate_rou_asset_values
  end

  def lease_liability(year:)
    @lease_liabilities[year]
  end

  def total_lease_payment
    @lease_liabilities.values.map(&:lease_payment).reduce(&:+)
  end

  def total_pv_lease_payment
    @lease_liabilities.values.map(&:pv_lease_payment).reduce(&:+).round(0)
  end

  def rou_asset(year:)
    @rou_assets[year]
  end

  private

  attr_reader :initial_direct_cost, :cash_incentives

  def calculate_ll_beginning_balances
    next_beginning_balance = total_pv_lease_payment
    @lease_liabilities.each_value do |ll|
      ll.beginning_balance = next_beginning_balance
      next_beginning_balance = ll.ending_balance
    end
  end

  def calculate_rou_asset_values
    next_beginning_balance = total_pv_lease_payment + initial_direct_cost - cash_incentives
    number_of_periods = @years.size
    lease_cost = (total_lease_payment + initial_direct_cost - cash_incentives) / number_of_periods
    @rou_assets.each do |year, rou_asset|
      rou_asset.beginning_balance = next_beginning_balance
      rou_asset.lease_cost = lease_cost
      rou_asset.asset_reduction =
        rou_asset.lease_cost - lease_liability(year: year).liability_accretion
      rou_asset.ending_balance = rou_asset.beginning_balance - rou_asset.asset_reduction

      next_beginning_balance = rou_asset.ending_balance
    end
  end
end

describe OperatingLeaseCalculator do
  it "receives" do
    lc = OperatingLeaseCalculator.new(
      years: 1..5,
      fixed_payment: 15_000,
      annual_increase: 0.025, # percentage
      discount_rate: 0.065, # percentage
      initial_direct_cost: 750,
      cash_incentives: 2_500
    )

    first_lease_liability = lc.lease_liability(year: 1)
    expect(lc.total_lease_payment).to eq(78_845.0)
    expect(lc.total_pv_lease_payment).to eq(65_328.0)

    expect(first_lease_liability.lease_payment).to eq(15_000)
    expect(first_lease_liability.pv_lease_payment).to eq(14_084.5)
    expect(first_lease_liability.beginning_balance).to eq(65_328.0)
    expect(first_lease_liability.liability_accretion).to eq(4_246.32)
    expect(first_lease_liability.ending_balance).to eq(54_574.32)

    first_rou_asset = lc.rou_asset(year: 1)
    expect(first_rou_asset.beginning_balance).to eq(63_578.00)
    expect(first_rou_asset.lease_cost).to eq(15_419.00)
    expect(first_rou_asset.asset_reduction).to eq(11_172.68)
    expect(first_rou_asset.ending_balance).to eq(52_405.32)
  end
end

v2_example_controller.rb

class AccountingLeasesController < ApplicationController
def show
  al = AccountingLease.find(params[:id])
  
  # This link model-calculator could be part of AcountingLease model initializer
  lc = LeaseCalculator.new(
    type: al.type,
    periods: al.periods,
    fixed_payment: al.fixed_payment,
    annual_increase: al.annual_increase,
    discount_rate: al.discount_rate,
    initial_direct_cost: al.initial_direct_cost,
    cash_incentives: al.cash_incentives
  )
  al.lease_liabilities = lc.lease_liabilities
  al.rou_assets = lc.rou_assets
  al.total_lease_payment = lc.total_lease_payment
  al.total_pv_lease_payment = lc.total_pv_lease_payment

  AccountingLeaseSerializer.new(accounting_lease: lc, calculator: lc)
end
end

class AccountingLeaseSerializer
  include FastJsonapi::ObjectSerializer
  attributes :id,
             :name,
             :location,
             :total_lease_payment,
             :total_pv_lease_payment

  has_many lease_liabilities, serializer: LeaseLiabilitySerializer
  has_many rou_assets, serializer: RouAssetSerializer
end

class LeaseLiabilitySerializer
  include FastJsonapi::ObjectSerializer
  attributes :beginning_balance,
             :interest_expense,
             :lease_payment,
             :pv_lease_payment,
             :ending_balance
end

class RouAssetSerializer
  include FastJsonapi::ObjectSerializer
  attributes :beginning_balance,
             :asset_amortization,
             :ending_balance
end

v2_lease_calculator.rb

class LeaseLiability
  attr_reader :period, :fixed_payment, :annual_increase, :discount_rate, :initial_direct_cost,
    :cash_incentives
  attr_accessor :beginning_balance

  def initialize(
    period:,
    fixed_payment:,
    annual_increase:,
    discount_rate:,
    initial_direct_cost:,
    cash_incentives:
  )

    @period = period
    @fixed_payment = fixed_payment
    @annual_increase = annual_increase
    @discount_rate = discount_rate
    @initial_direct_cost = initial_direct_cost
    @cash_incentives = cash_incentives
  end

  def ending_balance
    (beginning_balance + interest_expense - lease_payment).round(2)
  end

  def interest_expense
    beginning_balance * discount_rate
  end
  alias liability_accretion interest_expense

  def lease_payment
    (fixed_payment * (1 + annual_increase)**(period - 1)).round(1)
  end

  def pv_lease_payment
    (lease_payment / (1 + discount_rate)**period).round(1)
  end

  def ending_balance
    (beginning_balance + liability_accretion - lease_payment).round(2)
  end
end

class LeaseCalculator
  def initialize(type:, periods:, fixed_payment:, annual_increase:, discount_rate:,
                 initial_direct_cost:, cash_incentives:)
    @type = type
    @periods = periods

    @lease_liabilities = periods.reduce({}) do |acum, period|
      lease_liability = LeaseLiability.new(
        period: period,
        fixed_payment: fixed_payment,
        annual_increase: annual_increase,
        discount_rate: discount_rate,
        initial_direct_cost: initial_direct_cost,
        cash_incentives: cash_incentives
      )
      @initial_direct_cost = initial_direct_cost
      @cash_incentives = cash_incentives

      acum.merge(period => lease_liability)
    end
    calculate_ll_beginning_balances

    @rou_assets = periods.reduce({}) do |acum, period|
      acum.merge(period => RouAsset.new(period: period))
    end

    if @type == 'finance'
      calculate_finance_rou_asset_values
    else
      calculate_operating_rou_asset_values
    end
  end

  def lease_liability(period:)
    @lease_liabilities[period]
  end

  def total_lease_payment
    @lease_liabilities.values.map(&:lease_payment).reduce(&:+)
  end

  def total_pv_lease_payment
    @lease_liabilities.values.map(&:pv_lease_payment).reduce(&:+).round(0)
  end

  def rou_asset(period:)
    @rou_assets[period]
  end

  private

  attr_reader :initial_direct_cost, :cash_incentives

  def calculate_ll_beginning_balances
    next_beginning_balance = total_pv_lease_payment
    @lease_liabilities.each_value do |ll|
      ll.beginning_balance = next_beginning_balance
      next_beginning_balance = ll.ending_balance
    end
  end

  def calculate_finance_rou_asset_values
    next_beginning_balance = total_pv_lease_payment + initial_direct_cost - cash_incentives
    number_of_periods = @periods.size
    @rou_assets.each_value do |rou_asset|
      rou_asset.beginning_balance = next_beginning_balance
      rou_asset.asset_amortization = rou_asset.beginning_balance / number_of_periods
      rou_asset.ending_balance = rou_asset.beginning_balance - rou_asset.asset_amortization

      next_beginning_balance = rou_asset.ending_balance
    end
  end

  def calculate_operating_rou_asset_values
    next_beginning_balance = total_pv_lease_payment + initial_direct_cost - cash_incentives
    number_of_periods = @periods.size
    lease_cost = (total_lease_payment + initial_direct_cost - cash_incentives) / number_of_periods
    @rou_assets.each do |period, rou_asset|
      rou_asset.beginning_balance = next_beginning_balance
      rou_asset.lease_cost = lease_cost
      rou_asset.asset_reduction =
        rou_asset.lease_cost - lease_liability(period: period).liability_accretion
      rou_asset.ending_balance = rou_asset.beginning_balance - rou_asset.asset_reduction

      next_beginning_balance = rou_asset.ending_balance
    end
  end
end

class RouAsset
  attr_accessor :beginning_balance, :ending_balance, :lease_cost, :asset_reduction, :asset_amortization

  def initialize(period:)
    @period = period
  end
end

def example
  periods = 1..5

  lc = LeaseCalculator.new(
    type: 'finance',
    periods: periods,
    fixed_payment: 15_000,
    annual_increase: 0.025, # percentage
    discount_rate: 0.065, # percentage
    initial_direct_cost: 750,
    cash_incentives: 2_500
  )

  puts 'period beginning_balance interest_expense lease_payment pv_lease_payment ending_balance beginning_balance asset_amortization ending_balance'
  periods.each do |p|
    ll_row = lc.lease_liability(period: p)
    rou_row = lc.rou_asset(period: p)
    puts "#{p} #{ll_row.beginning_balance} #{ll_row.interest_expense} #{ll_row.lease_payment} #{ll_row.pv_lease_payment} #{ll_row.ending_balance} #{rou_row.beginning_balance} #{rou_row.asset_amortization} #{rou_row.ending_balance}"
  end
  puts 'totals total_lease_payment total_pv_lease_payment'
  puts "#{lc.total_lease_payment} #{lc.total_pv_lease_payment}"
end

v2_lease_calculator_spec.rb

require_relative 'lease_calculator'

describe LeaseCalculator do
  it "can calculate values for operating leases" do
    lc = LeaseCalculator.new(
      type: 'operating',
      periods: 1..5,
      fixed_payment: 15_000,
      annual_increase: 0.025, # percentage
      discount_rate: 0.065, # percentage
      initial_direct_cost: 750,
      cash_incentives: 2_500
    )

    first_lease_liability = lc.lease_liability(period: 1)
    expect(lc.total_lease_payment).to eq(78_845.0)
    expect(lc.total_pv_lease_payment).to eq(65_328.0)

    expect(first_lease_liability.lease_payment).to eq(15_000)
    expect(first_lease_liability.pv_lease_payment).to eq(14_084.5)
    expect(first_lease_liability.beginning_balance).to eq(65_328.0)
    expect(first_lease_liability.liability_accretion).to eq(4_246.32)
    expect(first_lease_liability.ending_balance).to eq(54_574.32)

    first_rou_asset = lc.rou_asset(period: 1)
    expect(first_rou_asset.beginning_balance).to eq(63_578.00)
    expect(first_rou_asset.lease_cost).to eq(15_419.00)
    expect(first_rou_asset.asset_reduction).to eq(11_172.68)
    expect(first_rou_asset.ending_balance).to eq(52_405.32)
  end

  it "can calculate values for finance leases" do
    lc = LeaseCalculator.new(
      type: 'finance',
      periods: 1..5,
      fixed_payment: 15_000,
      annual_increase: 0.025, # percentage
      discount_rate: 0.065, # percentage
      initial_direct_cost: 750,
      cash_incentives: 2_500
    )

    first_lease_liability = lc.lease_liability(period: 1)
    expect(lc.total_lease_payment).to eq(78_845.0)
    expect(lc.total_pv_lease_payment).to eq(65_328.0)

    expect(first_lease_liability.beginning_balance).to eq(65_328.0)
    expect(first_lease_liability.interest_expense).to eq(4_246.32)
    expect(first_lease_liability.lease_payment).to eq(15_000)
    expect(first_lease_liability.pv_lease_payment).to eq(14_084.5)
    expect(first_lease_liability.ending_balance).to eq(54_574.32)

    first_rou_asset = lc.rou_asset(period: 1)
    expect(first_rou_asset.beginning_balance).to eq(63_578.00)
    expect(first_rou_asset.asset_amortization).to eq(12_715.00)
    expect(first_rou_asset.ending_balance).to eq(50_863)
  end
end