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Are you looking for the simplest way to mid-year discounting using an MS Excel formula? Then this video is for you.
In this video, you will learn how to compute the net present value of cash flows if cash flows are expected to occur in the middle of a year rather than at the end of the year.
In this video, you will learn
➡️ NPV function
➡️ Mid-year discounting using cell-by-cell calculation
➡️XNPV function and its limitations to do mid-year discounting
NPV function in spreadsheets, by default, assumes that all cash flows occur at the end of the year. However, some valuation or corporate finance models assume that the cash flows occur in the middle of the year.
You need not overcomplicate it. A simple mathematical fix will give us the solution and can even make our files pretty dynamic. You can check that out in this video.