=NPV(periodic_rate,cash_fl

Mid-Period Discounting can utilize the existing NPV formula, with one modification:

**=NPV(periodic_rate,cash_fl**ows)*

__(1+periodic_rate)^.5__+ initial_cash_flow

See attached workbook example where this is proven by comparing the NPV calc (above) with a more "manual" set of periodic DCFs that are added up to equal the same result.

Here's a confirming link:

See Pg 48, re: http://my.safaribooksonlin

**A bit on XNPV as an alternative:**

Also, you could use XNPV for this, though it would not exactly match the NPV enhanced calculation, primarily because leap year is taken into account, # days in months are different, etc., so if you have a different starting year, you'd get a slightly different result, than just working with plain vanilla periods, as with the NPV calculation.

However, I also share the XNPV approach in the attached, as well, for completeness.

IMHO for straight-forward enterprise valuation methodologies, I suggest keeping things simple and using the enhanced NPV approach, bringing the cash flows forward 1/2 year with the NPV * (1+r)^.5 as opposed to dealing with XNPV. The differences in the calculation should not be material.

Again, this is primarily talking about even cash flows, where we're just doing mid-period discounting, not irregular cash flows which would require a DCF calculated approach if not for XNPV.

Further discussion on using NPV versus XNPV: http://www.finance30.com/f

Cheers,

Dave

NPV-Calcs-r1.xls