Technical Note—the Mid-Period and Other Approximations in the Presence of Uniform Intraperiod Cash Flows: A Critical Evaluation of Relative Error

When cash flows occur at equally spaced subperiods during an interest period, computing an approximate future worth is simplified by either assuming the aggregate cash flows occur at the end of the period or continuously throughout the period. This technical note shows that it is also computationally simple to assume that the aggregate occurs at the mid-point of the period, and the resulting approximation is better for commonly encountered interest rates and number of subperiods.