Backend Developer Intern Test: Node.js & PostgreSQL

Time: 2-3 hours

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Task: Build a Simple REST API for an EMI Calculator with Prepayment Option

Objective:
Develop a simple REST API using Node.js and PostgreSQL to calculate EMI (Equated Monthly Installment) with the added option of prepayments or extra EMI payments. The API should return a month-wise breakdown of payments, including how prepayments impact the loan.

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Instructions:

1. Database Setup:

• Create a PostgreSQL database with a table to store the following information:
  • id (primary key, auto-increment)
  • loan_amount (decimal)
  • interest_rate (decimal)
  • loan_tenure_months (integer)
  • emi (decimal)
  • prepayment_amount (decimal, default null) - stores any extra payments made during the loan.
  • remaining_balance (decimal) - updates based on monthly payments and prepayments.

2. API Endpoints:

POST /api/calculate-emi:

• Accepts user inputs: loan amount, interest rate, loan tenure in months, and an optional prepayment amount.
• Calculates the EMI based on the formula:

EMI = (P * R * (1 + R)^N) / ((1 + R)^N - 1)

Where:

• P = Loan amount
• R = Monthly interest rate (annual rate/12/100)
• N = Loan tenure (in months)
• If a prepayment or extra EMI is made, recalculate the remaining balance and adjust the loan tenure accordingly.
• Stores the inputs, calculated EMI, prepayments (if any), and updated balance in the PostgreSQL database.
• Returns the calculated EMI, prepayment details, and a month-wise breakdown of payments, showing:
  • EMI amount
  • Interest paid
  • Principal paid
  • Prepayment made (if any)
  • Remaining loan balance for each month

GET /api/emis:

• Fetches and returns all EMI records from the database.

GET /api/emi/:id:

• Fetches and returns a specific EMI record by its ID, including the month-wise breakdown of payments.

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Requirements:

• Use Express.js for building the REST API.
• Use Sequelize ORM to interact with PostgreSQL.
• Ensure the option for handling prepayment or extra EMI payment is included, recalculating the remaining balance and updating future EMIs or tenure accordingly.
• Write clean, maintainable code with appropriate comments.
• Handle basic error scenarios (e.g., invalid inputs, database connection failures).
• Ensure that the API follows RESTful principles and responds with JSON.

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Deliverables:

• A zipped folder containing:

  • The complete Node.js project.
  • SQL script to create the necessary PostgreSQL table.
  • A README.md with instructions on how to run the project (including setting up the database and environment variables).

• API should be tested using tools like Postman, and the responses should be provided as screenshots in the submission.

• The POST response for EMI calculation should include:

  • The EMI amount
  • The prepayment or extra EMI amount (if applicable)
  • A month-wise breakdown, showing for each month:
    • EMI paid
    • Principal paid
    • Interest paid
    • Prepayment made (if any)
    • Remaining balance

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Example API Response:

{
  "loanAmount": 500000,
  "interestRate": 8.5,
  "loanTenureMonths": 60,
  "emi": 10234.65,
  "prepayment": 20000,
  "monthWisePayments": [
    {
      "month": 1,
      "emiPaid": 10234.65,
      "interestPaid": 3541.67,
      "principalPaid": 6692.98,
      "prepayment": 20000,
      "remainingBalance": 473307.02
    },
    {
      "month": 2,
      "emiPaid": 10234.65,
      "interestPaid": 3346.70,
      "principalPaid": 6887.95,
      "prepayment": 0,
      "remainingBalance": 466419.07
    }
  ]
}