What Do the Courts Want? Finding the methodology for determining the appropriate discount rate in a lost profits case can be a convoluted journey. The numerator (the lost profits) may be adjusted through modeling. The denominator (the discount rate) may be a risk-free rate, a rate of return on investments, or the rate of return commensurate with generating the lost profits had no wrongful act occurred. And, ...

The Case for Use of a Risk-Adjusted Rate in Damages Cases Robert Dunn and Everett Harry laid out a process for modeling and discounting future lost profits to present value in their article, Modeling and Discounting Future Damages. Not all experts agreed with the position presented by Dunn and Harry. In March, we revisited modeling and its level of acceptance. This article revisits the more controversial po ...

The Present Value of Future Lost Profits, and the Time Value of Money Experts estimating the present value of a business’ future lost profits have much less direction from the courts than their counterparts estimating the present value of a person’s lost earning capacity. Professional literature has attempted to fill this gap providing many articles discussing the differing methods for analyzing lost profit ...