Computation of EIR PCD or POCI Instruments

The first step involved in the computation of EIR for PCD or POCI instruments is to determine the Adjusted Purchase price which is computed as the difference between the actual Purchase Price and the given Deferred Balance.

Subsequently, the recovery cash flows are discounted at a rate such that its net present value is equal to the adjusted purchase price. This rate is considered the EIR for the given PCD or POCI Instrument.

Note:

EIR for PCD or POCI instruments is computed only once, that is on the origination date.