The present value concept discounts the cash flows of a period by the entire period using the discount rate. The DCF valuation method relies on the present value concept to value the cash flows of a business. Therefore the DCF valuation method also discounts the cash flows of a period by the entire period using the discount rate. This assumption may be an appropriate reflection of reality for most companies. But not all companies. For some companies, the midyear convention is not appropriate. We this when the midyear convention is not appropriate on this page.

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