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fix(financial): support dynamic discount rates in sensitivity analysi… #613

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fix(financial): support dynamic discount rates in sensitivity analysi…
esegbueadam-sys Sep 2, 2026
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fix(build): resolve fetch Response type conflict in satellite-sources
esegbueadam-sys Sep 2, 2026
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fix(build): remove duplicate errorBody import in admin route
esegbueadam-sys Sep 2, 2026
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fix(build): resolve syntax and conflict errors in admin route
esegbueadam-sys Sep 2, 2026
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40 changes: 40 additions & 0 deletions src/__tests__/financial.test.ts
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Original file line number Diff line number Diff line change
Expand Up @@ -154,6 +154,46 @@ describe("performSensitivityAnalysis", () => {
expect(parameters.has("Degradation Rate")).toBe(true);
expect(parameters.has("Energy Output")).toBe(true);
});

it("discount rate sensitivity uses additive deltas, not multiplicative multipliers", () => {
const input10 = createDefaultFinancialInput(500, 80, { discount_rate: 0.1 });
const result = performSensitivityAnalysis(input10);
const drPoints = result.sensitivities.filter((s) => s.parameter === "Discount Rate");

// The "+1%" label means base (0.10) + 0.01 = 0.11, so effective multiplier ≈ 1.10
const plus1 = drPoints.find((s) => s.change === "+1%");
expect(plus1).toBeDefined();
expect(plus1!.multiplier).toBeCloseTo(0.11 / 0.1, 6);

// The "-2%" label means base (0.10) - 0.02 = 0.08, so effective multiplier = 0.80
const minus2 = drPoints.find((s) => s.change === "-2%");
expect(minus2).toBeDefined();
expect(minus2!.multiplier).toBeCloseTo(0.08 / 0.1, 6);

// The "+2%" label means base (0.10) + 0.02 = 0.12
const plus2 = drPoints.find((s) => s.change === "+2%");
expect(plus2).toBeDefined();
expect(plus2!.multiplier).toBeCloseTo(0.12 / 0.1, 6);

// Higher discount rate should reduce NPV
expect(minus2!.npv).toBeGreaterThan(plus1!.npv);
expect(plus1!.npv).toBeGreaterThan(plus2!.npv);
});

it("discount rate sensitivity is correct for the default 7% base rate too", () => {
const result = performSensitivityAnalysis(BASE_INPUT);
const drPoints = result.sensitivities.filter((s) => s.parameter === "Discount Rate");

// Base is 0.07; "+1%" means 0.07 + 0.01 = 0.08 → multiplier ≈ 0.08/0.07 ≈ 1.1429
const plus1 = drPoints.find((s) => s.change === "+1%");
expect(plus1).toBeDefined();
expect(plus1!.multiplier).toBeCloseTo(0.08 / 0.07, 4);

// "-2%" means 0.07 - 0.02 = 0.05 → multiplier ≈ 0.05/0.07 ≈ 0.7143
const minus2 = drPoints.find((s) => s.change === "-2%");
expect(minus2).toBeDefined();
expect(minus2!.multiplier).toBeCloseTo(0.05 / 0.07, 4);
});
});

describe("compareROI", () => {
Expand Down
82 changes: 47 additions & 35 deletions src/lib/financial.ts
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Original file line number Diff line number Diff line change
Expand Up @@ -164,7 +164,7 @@ function calculateIRR(cashFlows: number[], guess = 0.1): number {
let dnpv = 0;
for (let t = 0; t < cashFlows.length; t++) {
npv += cashFlows[t] / Math.pow(1 + rate, t);
dnpv += -t * cashFlows[t] / Math.pow(1 + rate, t + 1);
dnpv += (-t * cashFlows[t]) / Math.pow(1 + rate, t + 1);
}
if (Math.abs(npv) < tolerance) {
return round(rate, 4);
Expand All @@ -180,7 +180,7 @@ export function createDefaultFinancialInput(
_efficiencyPct: number,
partial?: Partial<FinancialInput>,
): FinancialInput {
const capacityFactor = 0.20;
const capacityFactor = 0.2;
const annualEnergy = capacityKw * 8760 * capacityFactor;
const installationCostPerKw = 1000;
const maintenancePerKwPerYear = 15;
Expand All @@ -190,24 +190,24 @@ export function createDefaultFinancialInput(
installation_cost: capacityKw * installationCostPerKw,
annual_maintenance_cost: capacityKw * maintenancePerKwPerYear,
annual_energy_output_kwh: annualEnergy,
electricity_price_per_kwh: 0.10,
electricity_price_per_kwh: 0.1,
degradation_rate: 0.005,
discount_rate: 0.07,
inflation_rate: 0.02,
project_lifetime_years: 25,
tax_incentives: capacityKw * installationCostPerKw * 0.30,
salvage_value: capacityKw * installationCostPerKw * 0.10,
tax_incentives: capacityKw * installationCostPerKw * 0.3,
salvage_value: capacityKw * installationCostPerKw * 0.1,
capacity_factor: capacityFactor,
};

const merged = { ...defaults, ...partial };

const finalInstallCost = merged.installation_cost;
if (partial?.tax_incentives === undefined) {
merged.tax_incentives = finalInstallCost * 0.30;
merged.tax_incentives = finalInstallCost * 0.3;
}
if (partial?.salvage_value === undefined) {
merged.salvage_value = finalInstallCost * 0.10;
merged.salvage_value = finalInstallCost * 0.1;
}

return merged;
Expand All @@ -218,7 +218,9 @@ export function calculateCostBenefit(input: FinancialInput): CostBenefitResult {
const operatingCashFlows = cashFlows.filter((cf) => cf.year > 0);

const totalRevenue = round(operatingCashFlows.reduce((sum, cf) => sum + cf.revenue, 0));
const totalMaintenance = round(operatingCashFlows.reduce((sum, cf) => sum + cf.maintenance_cost, 0));
const totalMaintenance = round(
operatingCashFlows.reduce((sum, cf) => sum + cf.maintenance_cost, 0),
);
const totalInstallation = input.installation_cost;
const totalOperating = totalMaintenance;
const totalCost = round(totalInstallation + totalOperating);
Expand Down Expand Up @@ -261,7 +263,7 @@ export function calculatePaybackPeriod(input: FinancialInput): PaybackPeriodResu
if (cum >= 0) {
const prevCum = cum - netCashFlows[i];
if (netCashFlows[i] !== 0) {
simplePaybackYears = (i - 1) + Math.abs(prevCum) / netCashFlows[i];
simplePaybackYears = i - 1 + Math.abs(prevCum) / netCashFlows[i];
} else {
simplePaybackYears = i;
}
Expand All @@ -276,7 +278,7 @@ export function calculatePaybackPeriod(input: FinancialInput): PaybackPeriodResu
if (discCum >= 0) {
const prevDiscCum = discCum - discountedCashFlows[i];
if (discountedCashFlows[i] !== 0) {
discountedPaybackYears = (i - 1) + Math.abs(prevDiscCum) / discountedCashFlows[i];
discountedPaybackYears = i - 1 + Math.abs(prevDiscCum) / discountedCashFlows[i];
} else {
discountedPaybackYears = i;
}
Expand Down Expand Up @@ -319,60 +321,64 @@ export function calculateNPV(input: FinancialInput): NPVResult {
};
}

type SensitivityVariation =
| { label: string; kind: "multiplier"; value: number }
| { label: string; kind: "delta"; value: number };

type SensitivityParam = {
key: keyof FinancialInput;
label: string;
variations: { label: string; multiplier: number }[];
variations: SensitivityVariation[];
};

const SENSITIVITY_PARAMS: SensitivityParam[] = [
{
key: "installation_cost",
label: "Installation Cost",
variations: [
{ label: "-20%", multiplier: 0.80 },
{ label: "-10%", multiplier: 0.90 },
{ label: "+10%", multiplier: 1.10 },
{ label: "+20%", multiplier: 1.20 },
{ label: "-20%", kind: "multiplier", value: 0.8 },
{ label: "-10%", kind: "multiplier", value: 0.9 },
{ label: "+10%", kind: "multiplier", value: 1.1 },
{ label: "+20%", kind: "multiplier", value: 1.2 },
],
},
{
key: "electricity_price_per_kwh",
label: "Electricity Price",
variations: [
{ label: "-20%", multiplier: 0.80 },
{ label: "-10%", multiplier: 0.90 },
{ label: "+10%", multiplier: 1.10 },
{ label: "+20%", multiplier: 1.20 },
{ label: "-20%", kind: "multiplier", value: 0.8 },
{ label: "-10%", kind: "multiplier", value: 0.9 },
{ label: "+10%", kind: "multiplier", value: 1.1 },
{ label: "+20%", kind: "multiplier", value: 1.2 },
],
},
{
key: "discount_rate",
label: "Discount Rate",
variations: [
{ label: "-2%", multiplier: (1 / 0.07) * 0.05 },
{ label: "-1%", multiplier: (1 / 0.07) * 0.06 },
{ label: "+1%", multiplier: (1 / 0.07) * 0.08 },
{ label: "+2%", multiplier: (1 / 0.07) * 0.09 },
{ label: "-2%", kind: "delta", value: -0.02 },
{ label: "-1%", kind: "delta", value: -0.01 },
{ label: "+1%", kind: "delta", value: 0.01 },
{ label: "+2%", kind: "delta", value: 0.02 },
],
},
{
key: "degradation_rate",
label: "Degradation Rate",
variations: [
{ label: "-0.25%", multiplier: 0.5 },
{ label: "+0.25%", multiplier: 1.5 },
{ label: "+0.50%", multiplier: 2.0 },
{ label: "-0.25%", kind: "multiplier", value: 0.5 },
{ label: "+0.25%", kind: "multiplier", value: 1.5 },
{ label: "+0.50%", kind: "multiplier", value: 2.0 },
],
},
{
key: "annual_energy_output_kwh",
label: "Energy Output",
variations: [
{ label: "-20%", multiplier: 0.80 },
{ label: "-10%", multiplier: 0.90 },
{ label: "+10%", multiplier: 1.10 },
{ label: "+20%", multiplier: 1.20 },
{ label: "-20%", kind: "multiplier", value: 0.8 },
{ label: "-10%", kind: "multiplier", value: 0.9 },
{ label: "+10%", kind: "multiplier", value: 1.1 },
{ label: "+20%", kind: "multiplier", value: 1.2 },
],
},
];
Expand All @@ -392,10 +398,14 @@ export function performSensitivityAnalysis(input: FinancialInput): SensitivityRe
for (const param of SENSITIVITY_PARAMS) {
for (const variation of param.variations) {
let variedInput: FinancialInput;
if (param.key === "discount_rate") {
variedInput = { ...input, [param.key]: input[param.key] * variation.multiplier };
let effectiveMultiplier: number;
if (variation.kind === "delta") {
const variedValue = (input[param.key] as number) + variation.value;
variedInput = { ...input, [param.key]: variedValue };
effectiveMultiplier = variedValue / (input[param.key] as number);
} else {
variedInput = { ...input, [param.key]: (input[param.key] as number) * variation.multiplier };
variedInput = { ...input, [param.key]: (input[param.key] as number) * variation.value };
effectiveMultiplier = variation.value;
}
const npvResult = calculateNPV(variedInput);
const paybackResult = calculatePaybackPeriod(variedInput);
Expand All @@ -404,7 +414,7 @@ export function performSensitivityAnalysis(input: FinancialInput): SensitivityRe
label: `${param.label} ${variation.label}`,
parameter: param.label,
change: variation.label,
multiplier: variation.multiplier,
multiplier: effectiveMultiplier,
npv: npvResult.npv,
payback_years: paybackResult.payback_years,
irr: npvResult.irr,
Expand Down Expand Up @@ -434,7 +444,9 @@ function calculateProjectROI(projectId: number, input: FinancialInput): ProjectR
};
}

export function compareROI(projects: { project_id: number; input: FinancialInput }[]): ROIComparisonResult {
export function compareROI(
projects: { project_id: number; input: FinancialInput }[],
): ROIComparisonResult {
const all = projects.map((p) => calculateProjectROI(p.project_id, p.input));

const byROI = [...all].sort((a, b) => b.roi_pct - a.roi_pct);
Expand Down
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