Business, Legal & Accounting Glossary
Accounting concept according to which all incoming and outgoing payments (cash flows) of an investment project are considered to have occurred on the last day of the accounting year. The investment period, therefore, begins with the end of ‘year-0.’ In computing the cost of debt for discounting the forecasted cash flows, for example, this method computes the annual interest by multiplying the opening balance with the annual interest rate. When using the dates convention, in contrast, cash flows are recorded on the actual dates they occur. Both of these conventions are used in computing and comparing different approaches to the discounted future benefits of an investment.
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Definitions for End-Of-Year Convention are sourced/syndicated and enhanced from:
This glossary post was last updated: 20th November, 2021 | 0 Views.