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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
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)
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