Mid-year convention in DCF

[Rasec]

Hi,
I’m valuing a company and a project;
A - Company - valuation date is 10/22/2012 ; assuming going concern and terminal value
B - Project -valuation is 10/22/2012 with termination date 3/31/2024
I’m having issues with conceptualizing the mid year convention adjustments and would like your help. I have computed the mid year periods as follows:
A)
YR: 2012 - .095890
YR: 2013 - 1.00
YR: 2024 - 11.7
B)
YR: 2012 - .095890
YR: 2013 - 1.00
YR: 2024 - 11.4 (as projects terminal date is 3/31/24)
Is this ok?

 

[numi]

I didn’t check your numbers but your explanation suggests B is more correct than A

 

[Rasec]

Both should be correct, it’s just that (A) is a business running forever and (B) is a project.
“should be” according to me but im not 100% sure.

 

[higgmond]

Midperiod for 2012 is 11/25/12, so periods to discount would be 0.0929 [yearfrac(11/25/12,10/22/12,1)].
Midperiod of 2013 is 6/30/13, so periods to discount would be 0.6877 [yearfrac(6/30/13,10/22/12,1)].

 

[Rasec]

Thanks guys!