This paper introduces the albedo-corrected parameterized equivalence constants (APEC) method, a new method for correcting the homogenized two-group cross sections of the pressurized water reactor (PWR) fuel assemblies (FAs) by taking into account the neutron leakage. First, an analysis was performed of the position dependence of the assembly-homogenized two-group cross sections in an actual core. In order to eliminate the two-group cross-section error in the conventional homogenization method, the APEC method is proposed which parameterizes the homogenized two-group cross sections in terms of an integrated albedo information current-to-flux ratio (CFR). Also, small color-set models are introduced to obtain physically meaningful CFR boundary conditions for the APEC method and their characteristic features are discussed. In the case of FAs with neighboring baffle, slightly modified APEC functions are introduced to deal with the strong spectral interaction between the FA and the baffle-reflector region in PWRs. In addition, an improved APEC function is developed by explicitly accounting for the neutron spectrum change in a FA in terms of a spectral index defined as the fast-to-thermal-flux ratio. For the test of the proposed APEC functions, a small modular reactor (SMR) core was chosen and comparative analyses were performed in detail for each type of homogenized two-group cross section. In this work, the transport lattice code DeCART2D was used for the analysis of the benchmark problems. In the comparative analyses, the APEC-corrected cross sections were compared with the conventional two-group constants and reference ones for several representative FAs. The APEC algorithm was implemented into an in-house nodal expansion method code in conjunction with a partial-current CMFD (p-CMFD) acceleration. The nodal analyses of an SMR initial core and a large PWR core were performed to evaluate the performance of the APEC method. In order to show the generality of the APEC functions obtained from lattice calculations, several modified core configurations were also analyzed. In addition, a rodded SMR initial core problem was also analyzed to test the APEC method in an extremely abnormal core configuration. The nodal analyses showed that the APEC method can improve the nodal accuracy significantly with a small amount of additional computing cost.