The Narrowly Defined Effective Rate

The Narrowly Defined Effective Rate (NDER) is defined as the interest rate component of the Annual Percentage Rate (APR), thus excluding all fees and costs.

The NDER of a transaction is equal to the annual interest rate that is equal to the present value of the cash receivable or payable over the life of the transaction taking into account only the interest component.

It is calculated using the APR formula excluding all the costs considered in it.

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