The declaration of a method or constructor specifies the number and type of the parameters passed to the method or constructor. For instance, the subsequent approach calculates the monthly payments for a home loan by considering the loan’s quantity, interest rate, duration (number of periods), and future value:

public double computePayment(double loanAmt,
                             double rate,
                             double futureValue,
                             int numPeriods) {
    double interest = rate / 100.0;
    double partial1 = Math.pow((1 + interest), -numPeriods);
    double denominator = (1 - partial1) / interest;
    double answer = (-loanAmt / denominator)
                    - ((futureValue * partial1) / denominator);
    return answer;
}

The loan amount, interest rate, future value, and number of periods are the four parameters that comprise this method. The first three are double-precision floating point numbers, while the fourth is an integer. The parameters are utilized in the method body and will assume the values of the arguments that are handed in at runtime.
Note: In a method declaration, the term “parameters” denotes the list of variables. Arguments are the values that are actually handed in when the method is called. In order to invoke a method, the arguments must correspond to the parameters of the declaration in terms of their type and order.