Which of the Following Statements Is True of the Calculation

question 26

Multiple Choice

Which of the following statements is true of the calculation of economic damages in a civil litigation?

• A) In economic damages calculations, risk is not an issue, since the discount rate is supposed to represent a risk-free rate.
• B) All past economic damages must be reduced to present value, which requires the application of a discount rate.
• C) Calculations of economic damages are often based on a set of foundational facts rather than assumptions.
• D) An economic expert must convert future losses to present value using the applicable interest rate.

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Definitions:

Variable Costs

Expenditures that vary in a direct manner with the volume of output or sales.

Straight-Line Depreciation

A mechanism for spreading the expenditure of a tangible asset over its longevity in equal annual fractions.

Interest Payments

The regular payments made by a borrower to a lender as compensation for the use of borrowed money, usually calculated as a percentage of the outstanding principal.

CCA Class

In the context of Canadian taxation, refers to the categorization of depreciable property for the purpose of calculating capital cost allowance (tax deductions for depreciation).