ModeldrillMid-year convention switch
A financial modeling exercise from Modeldrill. Solve it with a live spreadsheet grid in your browser, with Fill right and Fill down, and it is checked the moment you submit.
The task
Cash usually arrives through the year, not on the last day. Add a switch: when B3 is 1, discount each year half a year less (year minus 0.5); when it is 0, use the full year. Fill the discount period (row 7), discount factor (row 8), present value (row 9) and the total in B10.
What this exercise teaches
The mid-year convention raises value a little because each cash flow is pulled half a year closer. A switch cell lets you show both views without rebuilding the model.
A hint if you get stuck
Multiplying 0.5 by a 1-or-0 switch turns the half-year on and off without an IF: =B5-0.5*$B$3.
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