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M-99-11
OMB Circular No. A-94
APPENDIX C
(Revised January 1999)
DISCOUNT RATES
FOR COST-EFFECTIVENESS, LEASE PURCHASE,
AND RELATED ANALYSES
Effective Dates.
This appendix is updated annually around the time of the President's
budget submission to Congress. This version of the appendix is valid
through the end of January 2000. Copies of the updated appendix
and the Circular can be obtained from the OMB Publications Office
(202-395-7332) or in an electronic form through the OMB home page
on the world-wide WEB, /OMB. Updates of this appendix are also available
upon request from OMB's Office of Economic Policy (202-395-3381),
as is a table of past years' rates.
Nominal Discount
Rates. Nominal interest rates based on the economic assumptions
from the budget are presented below. These nominal rates are to
be used for discounting nominal flows, which are often encountered
in lease-purchase analysis.
Nominal Interest
Rates on Treasury Notes and Bonds
of Specified Maturities (in percent)
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3-Year
4.7
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5-Year
4.8
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7-Year
4.9
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10-Year
4.9
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30-Year
5.0
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Real Discount Rates.
Real interest rates based on the economic assumptions from the
budget are presented below. These real rates are to be used for
discounting real (constant-dollar) flows, as is often required
in cost-effectiveness analysis.
Real Interest
Rates on Treasury Notes and Bonds
of Specified Maturities (in percent)
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3-Year
2.6
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5-Year
2.7
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7-Year
2.7
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10-Year
2.7
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30-Year
2.9
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Analyses of programs
with terms different from those presented above may use a linear
interpolation. For example, a four-year project can be evaluated
with a rate equal to the average of the three-year and five-year
rates. Programs with durations longer than 30 years may use the
30-year interest rate.
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