Question
3. Jiffy Lude Pharmaceuticals (JLP) began business in 2019. JLPs ultimate workers compensation claims for 2019 are expected to be $200,000. Workers compensation losses are
3. Jiffy Lude Pharmaceuticals (JLP) began business in 2019. JLPs ultimate workers compensation claims for 2019 are expected to be $200,000. Workers compensation losses are expected to grow at a constant rate of 20% per year. The payout pattern for workers compensation losses is expected to be 50% in the first year, 35% in the second year, and 15% in the third year. JLP self-insures the workers compensation exposure. Based on the estimated losses, the 20% trend factor, and the pay-out pattern, what total cash outflow for workers compensation should JLP expect in 2019, 2020, 2021, 2022, and 2023? (5 pts)
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