An Overview Of Life-Cycle Cost Analysis Page 9
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21Present values, discounting
• Discount rates used to convert future costs to
present values
• Nominal or real (excluding inflation) discount
rates
• Federal energy and water projects: NIST provides
discount rates each year
– Currently 2.4% nominal and 3.0% real
– Real rate has floor of 3.0%, as specified by 10 CFR
436A
• Private-sector projects: may use cost of funds
(e.g. cost of debt, cost of equity)
9
Energy Exchange: Connect • Collaborate • Conserve
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