Discount rate in Cost Benefit Analysis for Infrastructure projects in Transportation (VSS2003/201)
Overview
Background & policy context:
A discount rate is used to convert flows of costs and benefits over time into a net present value. There are two reasons for doing this. The first is to determine whether a project is worthwhile. The second reason is to compare several projects that achieve the same objective but have different timeframes. The use of discounting enables the different cost and benefit flows to be converted into a single net present value number for decision-making.
Objectives:
The main objective of the study is to derive a discount rate for cost benefit analysis for infrastructure projects in transportation in Switzerland. In a first step the theoretical background of the discount rate will be described and the most important models and approaches for calculating the discount rate will be discussed.
Methodology:
The methodology of research is based both on theory and on the results of current research and modeling approaches, with a necessary adaptation to Swiss standards.
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