Risk simulations are usually conducted using the risk-free rate of interest (approximated by the relevant Commonwealth Bond rate) as the objective of the simulation is to derive a variance around an expected value, not to derive a risk-adjusted value of the project per se. However, the risk adjustments in the PSC relate to base costing that uses the discount rate as advised by Treasury and Finance, currently 5% real. For consistency in valuation, this discount rate should also be used in risk simulation models.