CASE - HARVEY'S TREE FARM, INC
Question - Assume that, based on Q2d. Harvey's made an initial settlement offer to Burger.
However, on behalf of Burger, Mr. Cooper declined the offer because he felt the offer underestimated the lost profits. He stated that profits from the last six months (26 weeks) before the fire are more indicative of future expected profits. He feels that only data from the last six months should be used to calculate future expected profits.
Having thought about Mr. Cooper's suggestion, you consider several options as an estimate of lost profits. These include 1) the full year, 2) the last six months only, 3) a weighted average that gives twice the weight to the last six months as to the first six months, or 4) some other weighted average.
Which method do you think gives the most accurate estimate of lost profits?
Attachment:- Assignment Files.rar