31-10-2014, 12:31 PM
Hi all,
I have a question on setting a different general discount rate for different time periods:
So, for example, if I specify a G_DRATE of 4% until 2030 and 3% afterwards how is this applied to investments?
Is an investment made in 2040 discounted for 10 years by 3% and then by 4% until the baseyear or is the discount rate of 3% used for the entire timespan to the baseyear?
Also, if no additional technology-specific rates are specified, and G_DRATE is used to annualize investments payments: is the discount rate used for an investment made in 2020 (with lifetime of more than 10 years) 4% over the entire lifetime or is 3% used for all payments made after 2030? I am afraid that using time-dependent discount rates might have a distorting effect if the first option is used.
I hope that makes sense!
Thanks,
Birgit
I have a question on setting a different general discount rate for different time periods:
So, for example, if I specify a G_DRATE of 4% until 2030 and 3% afterwards how is this applied to investments?
Is an investment made in 2040 discounted for 10 years by 3% and then by 4% until the baseyear or is the discount rate of 3% used for the entire timespan to the baseyear?
Also, if no additional technology-specific rates are specified, and G_DRATE is used to annualize investments payments: is the discount rate used for an investment made in 2020 (with lifetime of more than 10 years) 4% over the entire lifetime or is 3% used for all payments made after 2030? I am afraid that using time-dependent discount rates might have a distorting effect if the first option is used.
I hope that makes sense!
Thanks,
Birgit