easy · Investment Banking valuation-core
How does the 'Mid-Year Convention' in a DCF impact the Present Value (PV) of cash flows compared to a year-end discounting approach?
- It decreases the PV because cash flows are assumed to arrive later in the year.
- It has no impact on PV but simplifies the calculation of the WACC.
- It only impacts the Terminal Value calculation, not the projection period.
- It increases the PV because cash flows are discounted for shorter time periods.
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