—In this paper, a conceptual framework for the
measurement and application of opportunity cost of capital for
the public sector budgetary purposes is elaborated. The paper
fills the gap to offer a structured overview of discount rate
classifications discussed in literature, also how these discount
rates are measured and finally applied to various long-term
investment opportunities faced by the public sector. The final
result should give the answer to the question, whether there
should be used different discount rates to different public sector
investment projects or maybe there is the one and the only
universal discount rate applicable to all cases?
—Public sector investment, opportunity cost of
capital, social opportunity cost, social rate of time preference.
Kaia Kask is with the Faculty of Economics and Business Administration,
the Institute of Finance, University of Tartu, Estonia (e-mail:
Cite:Kaia Kask, "Conceptual Framework for Measurement and Application of Public Sector Opportunity Cost of Capital," International Journal of Trade, Economics and Finance vol.5, no.1, pp. 114-117, 2014.