Adjustments for Present Value and Future Inflation
The concept of "present value" is derived from the fact that any given sum of money has the capacity (if properly invested) to earn additional money over time. Indeed, it is this inherent earning power of money that gives rise to the requirement in most jurisdictions that "present value" adjustments must be made in every situation where damages representing future pecuniary losses are awarded. Part I of this lesson is designed to explain why certain types of damage awards must be adjusted to their "present value," and to demonstrate precisely how those adjustments are actually calculated.