Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

4. Metal Fabrication Company (MFC) beqan business in late 2018. MFC's ultimate workers compensation claims for 2019 are expected to be $150,000. Workers compensation claims

image text in transcribed
4. Metal Fabrication Company (MFC) beqan business in late 2018. MFC's ultimate workers compensation claims for 2019 are expected to be $150,000. Workers compensation claims are expected to grow at a constant rate of 20% per year. The payout pattern for workers compensation losses is expected to be 60% in the first year, 30% in the second year, and 10% in the third year. MFC self-insures the workers compensation risk. Based on the estimated losses using the 20% trend factor and the pay-out pattern, what total cash outflow for workers compensation should MFC expect in 2019, 2020, 2021 2022, and 2023? (5 pts) 4. Metal Fabrication Company (MFC) beqan business in late 2018. MFC's ultimate workers compensation claims for 2019 are expected to be $150,000. Workers compensation claims are expected to grow at a constant rate of 20% per year. The payout pattern for workers compensation losses is expected to be 60% in the first year, 30% in the second year, and 10% in the third year. MFC self-insures the workers compensation risk. Based on the estimated losses using the 20% trend factor and the pay-out pattern, what total cash outflow for workers compensation should MFC expect in 2019, 2020, 2021 2022, and 2023? (5 pts)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions