‘computing economic damages’ | Accounting homework help


This case is about ‘computing economic damages’, which is also the exact title of Chapter 12.
Your ultimate goal is to fill the form ‘Enclosure E’ on page 224 of the case. In order for you to do that, you need to work on Enclosure B~E first.
This case shares similarities to Haley Mills case in ‘Permanent Disability Case’ section of the textbook, but the biggest difference is that, while Haley will not be able to work again, Jane Doe in the case study has secured a new job. That means, you need to calculate the difference between 1) the wage that she would have earned until her retirement if she had not suffered an injury and 2) the wage that she will actually earn until her retirement. Also, as we are dealing with ‘future cash flows’, we need to discount them to ‘present values’ when claiming the economic damage to the defendant.  

Assignment Guide

1. Create Enclosure B and C in Excel and compute the projected income (f), till Jane’s retirement age, for pre- and post-injury employments. 
2. How to calculate (f): (a)-(b)+(c)=(d); (d)-(e)=(f). Information on the current salary, growth rate of that salary, tax rate, (fringe) benefit as a % of annual salary, percentage of unemployment risk are all available on page 219.
3. Create Enclosure D in Excel and calculate the household replacement cost. Information on the cost is also on page 219. You don’t need to worry about the present value yet.
4. Create Enclosure E in Excel and calculate the total economic damage. You have already calculated (a) through (c) in Enclosure B~E, and (d) = (a) – (b) + (c).
5. In Enclosure E, (e) can be calculated using the present value formula on page 219.
6. Create Enclosure F in Excel and finish the form. The ‘past’ damages are damages incurred before the trial date (=2-year anniversary of the injury), and the ‘future’ damages are damages estimated to be incurred after the trial.

What to submit:

Submit ‘one’ Excel file with Enclosure B~F in separate tabs


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