hard · Investment Banking
Why is the 'Mid-Year Convention' typically used in a DCF analysis?
- Because WACC is always calculated as a mid-year average of debt and equity.
- Because it allows the analyst to ignore the effects of seasonality in the business.
- Because most companies report their full-year results in June, the midpoint of the calendar year.
- Because cash flows are generated throughout the year, so discounting them from the end of the year would be too conservative.
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