Segment Rate Mechanics

[tuni88]

As I understand it, the first of the three interest rates applies to years 1 thru 5, the second to years 6 thru 20, and the third to years beyond 20. [Please correct if wrong.]

So say an amount payable in year 27 is being discounted back to the present. Does the 3rd rate apply only back for 7 years (followed by fifteen years at rate 2 and then five years at rate 1) or does the 3rd rate apply to all 27 years?

Thanks.

[Mike Preston]

All.