In presenting cost estimates in present value terms, where are the discount rates found?

In presenting cost estimates in present value terms, where are the discount rates found?

• A. GAAP Standards
• B. IRS Guidelines
• C. IMF Guidelines
• D. OMB Cir. A-94

Answer: (D)

The discount rate used to present cost estimates in present value terms is set by federal guidance to ensure consistency across analyses. Specifically, the Office of Management and Budget’s Circular A-94 provides the guidelines and the discount rates for benefit-cost analyses of federal programs. This circular standardizes how future costs and benefits are discounted, so all agencies use the same basis when comparing alternative options. GAAP standards govern financial reporting for entities, IRS guidelines relate to tax rules, and IMF guidelines pertain to international monetary matters. None of those establish the discount rates for presenting federal cost estimates.

The discount rate used to present cost estimates in present value terms is set by federal guidance to ensure consistency across analyses. Specifically, the Office of Management and Budget’s Circular A-94 provides the guidelines and the discount rates for benefit-cost analyses of federal programs. This circular standardizes how future costs and benefits are discounted, so all agencies use the same basis when comparing alternative options.

GAAP standards govern financial reporting for entities, IRS guidelines relate to tax rules, and IMF guidelines pertain to international monetary matters. None of those establish the discount rates for presenting federal cost estimates.