Hi, all - Working on a valuation in which we're using end-of-year discounting. FYE June 30, but client wants to know what portion of value is attributable to a period ending in October. Director insists on an annual forecast. How would you go about discounting the period that's getting split?
Example Forecast Periods: FYE 6/30/20 FYE 6/30/21 FYE 6/30/22 FYE 6/30/23 (to be split into Period 7/1/22-10/31/22 and Period 11/1/22-6/30/23) FYE 6/30/24 FYE 6/30/25
Would it be an oversimplification to prorate the split period's PV? Any other ideas?
Hey ironclad, I'm here to break the silence...any of these links help you?:
Fingers crossed that one of those helps you.
Bump. Anyone have an idea? Perhaps prorating the split period’s FCF and discounting from the end of each sub-period would be appropriate. However, I think this might conflict slightly with the end-of-year discounting for the rest of the periods since I would effectively be discounting one year’s FCF at two different points.
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