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- For a financial instrument with premiums/discounts/charges/transaction costs, the sum of the three components “nominal interest income”, “smoothing effect” and "amortisation" represents the theoretical effective interest as defined in IFRS 9.
- Considering the same sample deal of the regular EIR (link zu Effective Interest rate), the smoothing EIR is calculated in addition to the regular EIR. Ignoring the initial discount with a value of 3000, the following equation needs to be considered in order to derive the smoothing EIR:
- The solution to the equation results in an approximated value for EIR = 6.137883%.
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