8C-i 

### APPENDIX 8C. R ESIDENTIAL DISCOUNT RATE DISTRIBUTIONS

TABLE OF CONTENTS

8C.1 INTRODUCTION ...................................................................................................8C-1 8C.2 DISTRIBUTION OF REAL INTEREST RATES FOR CONSUMER DEBT CLASSES ................................................................................................................8C-1 8C.3 DISTRIBUTION OF REAL INTEREST RATES FOR FINANCIAL ASSETS....8C-2

LIST OF TABLES

Table 8C.2.1 Household Debt: Real In terest Rate Distributions ......................................8C-2 Table 8C.3.1 Household Assets: Time-Series of Real Interest Rates ...............................8C-48C-1 

### APPENDIX 8C. HOUSEHOLD DISCOUNT RATE DISTRIBUTIONS

8C.1 INTRODUCTION
As discussed in Chapter 8, DOE characteri zed real interest rates associated with household debt and assets with pr obability distributions to devel op a residential discount rate. The sections below provide the probability distributions.

8C.2 DISTRIBUTI ON OF REAL INTEREST RATES FOR CONSUMER DEBT
CLAS SES

Table 8C.2.1 presents weighted distributions of the rea l effective interest rates for various household debt classes. As reported in Chapte r 8, DOE used data from the Federal Reserve Board’s Survey of Consumer Finances (SCF) in 1989, 1992, 1995, 1998, 2001, 2004, and 2007 to generate the probability dist ributions for household debt. The weights associated with each binned rate correspond to the share of each value among the surveyed households. DOE calculated the rates shown in Table 8C.2.1 by developing a similar table from each of the seven SCF surveys. DOE used the average value in eac h binned rate and then averaged across the

seven SCF surveys to derive the values shown in Table 8C.2.1

.8C-2 

### Tabl e 8C.2.1 Household Debt: Real In terest Rate Distributions

1 st Mortgage Home Equity Credit Card Installment Loans Other Residence Other Line of Credit
Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%) Rate (%) Weight (%) 0.5 6.9 0.4 10.4 0.0 6.9 0.0 40.2 0.2 15.1 0.1 5.0 1.6 22.4 1.5 9.8 1.4 2.3 1.4 2.3 1.5 7.1 1.4 3.8 2.5 32.7 2.6 18.0 2.5 2.4 2.4 4.7 2.5 9.8 2.5 1.6 3.5 28.4 3.5 30.0 3.5 4.1 3.4 6.2 3.5 17.9 3.5 5.2 4.4 17.1 4.5 21.0 4.5 5.5 4.5 6.7 4.5 17.4 4.5 7.6 5.4 5.0 5.4 13.1 5.6 7.6 5.6 7.8 5.5 20.6 5.5 14.4 6.4 2.3 6.4 5.5 6.7 8.8 6.7 8.8 6.5 14.8 6.7 11.0 7.4 0.8 7.5 4.2 7.5 5.0 7.5 3.9 7.5 6.9 7.6 6.0 8.5 0.5 8.5 2.2 8.7 7.5 8.6 4.6 8.6 2.9 8.7 10.5 9.5 0.2 9.5 1.0 9.6 6.9 9.5 4.3 9.4 1.7 9.5 10.4 10.5 0.1 10.6 0.6 10.6 6.5 10.6 3.4 10.6 0.4 10.5 7.9 11.6 0.1 11.8 0.2 11.5 7.3 11.5 2.3 11.6 0.6 11.6 7.4 12.4 0.1 12.7 0.4 12.6 6.1 12.5 3.1 12.6 0.5 12.5 7.5 13.5 0.0 13.7 0.1 13.6 5.5 13.5 2.2 14.7 0.5 13.5 2.2 14.4 0.1 14.7 0.2 14.7 10.9 14.7 4.3 15.7 0.1 14.7 4.6 16.7 0.0 16.7 0.0 15.6 9.3 15.6 2.0 16.6 0.3 15.6 2.2 22.9 0.0 17.5 0.0 16.4 6.8 16.5 2.2 17.9 0.1 16.5 3.1 42.5 0.1 17.6 6.6 17.6 2.2 17.3 1.3 18.5 2.3 18.5 1.4 18.5 0.7 19.4 2.9 19.4 0.8 19.1 1.4
20.5 1.5 20.5 0.9 20.2 1.0 21.4 0.7 21.5 0.6 21.5 0.8 22.5 0.4 22.3 0.3 22.1 0.2 23.6 0.1 23.4 0.3 23.5 0.3 24.6 0.3 24.6 0.4 25.4 0.4 25.5 0.4 25.3 0.3 54.1 0.2 26.3 0.2 26.6 0.0 27.3 0.0 27.8 0.1 28.4 0.1 28.5 0.0 29.3 0.0 29.3 0.1 36.9 0.0 34.1 0.1 36.1 0.0 43.6 0.0 44.3 0.0 47.2 0.0 93.5 0.0



### 8C.3 DISTRIBUTION OF REAL INTEREST RATES FOR FINANCIAL AS SETS

Table 8C.3.1 presents the time series of real eff ective inte rest rates associated with various household asset types. As reported in Chapter 8, DOE used data from the various8C-3 

### sources to generate the probability distributions for each of the asset types identified in Table 8C.3.1 . For each asset, the average, minimum, ma xi mum, and standard de viation are provided. DOE developed probability distributions based on the average va lue and standard deviation. Because the use of the standard deviations yi elds distributions with negative values, DOE truncated the lower end of the nor mal distribution at a di scount rate of zero. DOE also truncated the higher end of the normal distribution in equal proportion to the truncati on at the lower end to maintain the average values above in Table 8C.3.1

.8C-4 

### Table 8C.3.1 Household Assets: Time-Series of Real Interest Rates

Year Savings Accounts (%) CDs 6 Months (%) Treasury Savings Bonds

(%) Corp AAA Bonds

(%) Stocks S&P 500 (%) Mutual Funds

(%) 1977 - -0.6 1.2 1.4 -12.7 -8.0 1978 - 0.9 0.8 1.1 -1.0 -0.4 1979 - 0.1 -1.9 -1.5 6.4 3.7 1980 - -0.5 -2.0 -1.4 16.1 10.1 1981 - 5.0 2.8 3.5 -13.6 -8.1 1982 - 6.0 6.2 7.2 13.4 11.0 1983 - 5.9 7.7 8.6 18.5 14.9 1984 5.5 6.1 7.8 8.0 1.8 3.8 1985 5.4 4.5 7.0 7.5 26.7 20.1 1986 6.0 4.6 5.8 7.0 16.3 12.8 1987 3.3 3.2 4.8 5.5 2.1 3.0 1988 3.1 3.6 4.6 5.4 11.9 9.5 1989 3.0 4.1 3.5 4.2 25.4 18.1 1990 2.4 2.6 3.0 3.7 -8.0 -4.3 1991 2.7 1.6 3.8 4.4 25.0 17.9 1992 2.1 0.7 4.5 5.0 4.4 4.4 1993 1.1 0.3 3.5 4.1 6.8 5.7 1994 1.3 2.3 4.7 5.3 -1.2 0.8 1995 2.2 3.1 3.9 4.6 33.4 23.6 1996 2.0 2.4 3.6 4.3 20.3 14.7 1997 2.7 3.4 4.2 4.9 28.9 20.7 1998 3.4 3.8 4.0 4.9 26.4 18.9 1999 2.3 3.2 3.6 4.7 18.3 13.4 2000 1.7 3.1 2.5 4.1 -12.0 -7.2 2001 1.8 0.8 2.6 4.1 -14.3 -8.7 2002 1.3 0.2 3.8 4.8 -23.2 -14.2 2003 -0.2 -1.1 2.6 3.3 25.6 17.9 2004 -0.7 -0.9 2.3 2.9 7.8 6.0 2005 -0.6 0.3 1.2 1.8 1.4 1.3 2006 0.8 2.0 1.6 2.3 12.0 8.6 2007 1.9 2.3 1.9 2.6 2.6 2.4 2008 0.2 -0.7 0.4 1.7 -38.9 -25.8 Average 2.2 2.3 3.3 4.1 7.1 5.8 Minimum -0.7 -1.1 -2.0 -1.5 -38.9 -25.8 Maximum 6.0 6.1 7.8 8.6 33.4 23.6

Std. Dev. 1.7 2.1 2.3 2.3 16.8 11.5