2.3  Discounting

2.3.1  To ensure that the VfM options are compared on a like-for-like basis, all future cashflows in respect of the different options are brought back to a common price base, by discounting the individual cashflows using the standard Treasury 3.5% real discount rate combined with the assumed retail price index.

2.3.2  The Model also requires the input of a private sector funding structure for the Authority to select and justify, which it uses to calculate the financed cost of procurement under PFI. These are key assumptions and users will be expected to provide additional evidence in support of their modelling assumptions.