Opinion ID: 785944
Heading Depth: 3
Heading Rank: 3

Heading: Other Observations About the District Court's Analysis

Text: 68 There are other potential problems with the District Court's calculation, which relied on the methodology provided by the government's experts. It appears that the government's experts computed annual estimates of WACC for each of the years 1990-1998, and came up with the 12.73% figure by taking the arithmetic mean. 13 Since the savings from different violations accrued on different dates over a several year period, it is questionable whether an average interest rate is appropriate, when year-to-year interest rate estimates are known and could be used with only minimal additional effort by the experts. 14 The potentially problematic practice of using a mean interest rate over a large time span is present in the government's experts' report. 15 As it happens, this wound up hurting ALC: The theoretical WACC figures from the early 1990s (15.85% in 1990 and 1991, and 13.95% in 1992) are the highest of the group, but really have no bearing on the economic benefit conferred by post-1992 violations. Thus, the average WACC was biased toward the less-relevant higher WACC estimates from the early 1990s. 69 Finally, we note that the government is unquestionably correct in its assertion at oral argument that any computation must use the same discount rate for both forward and backward computations during the same period. For example, it would be clearly inappropriate to discount all economic benefit backwards to a uniform date using one rate, and then use a different rate to carry the value forward to the date of judgment.