Present value of any judgment
It matters a great deal when the trial ends for the present value of the judgement.
I seem to recall that most people expected total royalties in the range of $200 to $300 million back in 2012/2013. The calculations back then had a large part for past damages and several years in the future, discounted to present day to give people an idea what the shares could be worth, along with assigning a probability to each step in the legal process towards collecting on a judgement.
As an example of how taking even a few years would effect the present value of the shares, assume that the judgement is $300 million, and the discount rate is 10%.
Year judge PV shares $/share
0 300 300 200 1.50
1 300 272 200 1.36
2 300 247 200 1.23
3 300 225 200 1.12
4 300 204 200 1.02
5 300 186 200 0.93
Year 0 is if the judgement was paid today.
All other years are the payment, in full, at the end of the year.
Judge is the judgement of $300 million
Shares are common shares in millions
$/share is how much the present value of a share would be, assuming all other items are correct.
I assume that someone has done a more recent PV analysis with better numbers recently?
But, to illustrate the point, the number of years does greatly effect what the present value of the shares would be. As you can see, just going out only five years to collecting reduces the present value of the shares by over one third.
Louis J. Desy Jr.
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