Module VI· DCF Model BuildAdvanced
Question

How do you model stub-period discounting for a mid-year valuation date?

Answer

If valuation date is mid-year, discount near-term cash flows by the exact fraction from valuation date to cash-flow date. Use XNPV or custom discount factors based on dates. For annual models, prorate current-year cash flow and discount stub FCF separately, then discount later years with adjusted exponents.