The Bias in Annual (Versus Monthly) Discounting is Immaterial

This article presents a discussion of the validity of using the mid-year convention from a different point of view than the March 2002 B VR article by Michael Dobner.¹ Although our conclusions are similar, we develop exact formulas for annuity discount factors with growth for both monthly and daily cash flows. These can be useful tools for the valuation community when precision is important.