JOURNAL OF APPLIED BUSINESS AND ECONOMICS
The Importance of the Relationship Between Growth Rates & Discount Rates
in Assessing the Value of Economic Damages
Author(s): Moses Sawney, Richard Lockley, Jerome S. Paige
Citation: Moses Sawney, Richard Lockley, Jerome S. Paige, (2017) "The Importance of the Relationship Between Growth Rates & Discount Rates in Assessing the Value of Economic Damages," Journal of Applied Business and Economics, Vol. 19, Iss.3, pp. 83-105
Article Type: Research paper
Publisher: North American Business Press
Abstract:
Examining the implied net discount rates in the reports of several economists, we illustrate how easily these economists end up increasing, when they should be, decreasing to present value. To avoid this trap, when experts use data from different sources and time periods, they should insure, the relationship between their growth and discount rates is theoretically and empirically sound, and their valuation model is independent of the decision to invest the amount of an award.