Q. Where do I find discount rates for a multi-year analysis?
If you are in an organization that has a dedicated finance person, you may be able to speak with him or her about the appropriate discount rate to use for calculations of the time value of money. If not, some searching may be necessary. You may find that you need to use different discount rates for capital purchases than for your human resources or materials purchases. The cost of capital will typically be known either by your financial analyst or manager, or by whoever purchases IT infrastructure. You can sometimes calculate an appropriate rate for human resources by looking at the historical inflation on salaries.
Ernst & Young Global Insurance Center. Discount Rates: One Size Does Not Fit All. http://www.ey.com/Publication/vwLUAssets/Key_components_of_discount_rates_for_insurance_contracts/$FILE/EY_Discount_rates_Oct_2011.pdf
Provides detailed information about interest rates and determining the appropriate discount rate when conducting multi-year financial analysis.
Tredinnick, Steve. Don't Discount the Discount Rate.http://www.syska.com/cms/docs/articles/STredinnick.DistrictEnergy_01.25.12.pdf
Another article from a financial consultant about different ways to calculate the discount rate.
wikiHow to do anything. [website] How to Calculate NPV. http://www.wikihow.com/Calculate-NPV
Provides a very simple method for calculating the net present value of money for multi-year financial analyses.
Last updated on 08/26/13, 9:28 pm by callee