OMB Circular No. A-94
**APPENDIX C**
(Revised January 2000)
**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 2001. Copies of the updated appendix
and the Circular can be obtained in an electronic form through the OMB home page,
/OMB/circulars/index.html. 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)**
**
**3-Year**
5.9 |
**5-Year**
6.0 |
**7-Year**
6.0 |
**10-Year** 6.1 |
**30-Year** 6.3 |
**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)
**3-Year**
3.8 |
**5-Year**
3.9 |
**7-Year**
4.0 |
**10-Year** 4.0 |
**30-Year** 4.2 |
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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