Appendix C to Circular No. A-94

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)

3-Year
4.7

5-Year
4.8

7-Year
4.9

10-Year
4.9

30-Year
5.0

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
2.6

5-Year
2.7

7-Year
2.7

10-Year
2.7

30-Year
2.9

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.