NIST Updates Discounts Rates for Federal Life-Cycle Cost Analyses

March 15, 2010

The National Institute of Standards and Technology (NIST) announced 2010 FEMP discount rates for use in life-cycle cost analyses for Federal projects related to energy conservation, water conservation, and renewable energy resources.  

The FEMP discount rates for 2010 are valid from April 1, 2010, to March 31, 2011. They are as follows:

• Real discount rate: 3.0%
• Nominal discount rate: 4.0%
• Implied long-term inflation rate: 0.9%
• Calculated long-term inflation rate: 3.4%  

A discount rate is the rate of interest, reflecting the investor’s time value of money (or opportunity cost), used to convert (discount) cash flows to a common time. The 2010 discount rates are for use in cost-effectiveness studies related to the design and operation of Federal facilities. Federal energy managers are encouraged to update life-cycle cost analysis applications and spreadsheets accordingly.