BRD

BRD — EMI Calculation Engine

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# BRD — EMI Calculation Engine

## 1. Overview
The EMI Calculation Engine computes monthly installment amounts for all loan products at Acme Bank. It supports flat rate, reducing balance, and step-up/step-down EMI structures.

## 2. Functional Requirements

### 2.1 EMI Calculation Methods
- **FR-EMI-001**: Reducing balance method: EMI = P × r × (1+r)^n / ((1+r)^n - 1)
- **FR-EMI-002**: Flat rate method: EMI = (P + P×r×n) / (12×n)
- **FR-EMI-003**: Step-up EMI: EMI increases by a fixed % annually (configurable 5–15%)
- **FR-EMI-004**: Step-down EMI: EMI decreases by a fixed % annually

### 2.2 Prepayment Handling
- **FR-EMI-005**: Partial prepayment shall reduce outstanding principal
- **FR-EMI-006**: System shall offer two options: reduce EMI or reduce tenure
- **FR-EMI-007**: Prepayment penalty: 2% on floating rate loans (waived after 12 months)

## 3. Acceptance Criteria
- AC-01: EMI calculation matches reference values within ±1 rupee for all test cases
- AC-02: Step-up EMI schedule correctly projects all future EMIs
- AC-03: Prepayment recalculation completes within 2 seconds