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How you would incorporate into your analysis impact of new boat sales on the used boat department

CASE REQUIREMENTS You have been asked to prepare a dollar estimate of profits lost by CD Boats as a consequence of the bribery scheme that diverted new boats to ‘‘dirty dealers.’’ The total dollar estimate should be valued as of December 31, 1992. State law provides for interest at a statutory annual rate of 8 percent.


Your assignment is to prepare a report as follows.

1. Prepare a written brief or memorandum (I advise you “live blog” as you work toward requirement #2, like Mark Zuckerberg in The Social Network) to the Court outlining and explaining the general approach that you believe should be used to estimate the dollar amount of damages.

Your memorandum should be between two and six pages long and should cover the following areas:

a. The general framework for your analysis.

b. How you would measure the lost profits for new boat sales. (To assist you, I have provided selected regressions in Table 2.)

c. How you would incorporate into your analysis the impact of new boat sales on the used boat department and on the service and parts departments.

d. How you would sum the total annual lost profits into a single figure as of December 31, 1992.


2. Apply your methodology to the data from CD Boats to arrive at the total amount of damages as of December 31, 1992.


3. Write a short memorandum setting forth the limitations of your analysis. Include factors that could cause your estimate to be over- or understated.

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