Management is concerned at the rate of occupational injury arising from sprains and strains sustained by drivers exiting trucks on uneven ground in the loading yard. These trip, slip and fall incidents result in an average $55,000 per year in injury management and workers' compensatian costs. Two options for mitigating the risk of injury have been identified. Option 1. Management could replace the two existing 20-year-old trucks with two Argosy Freightiners. The Argosy's saler access and egress design (swing cut staircase) is expected to reduce the risk of trips and falls, and thus knee, anile and back injuries by 95%. The purchase cost for each new wehicle is expected to be: $94,000 plus $1,400 trassfer costs. The company could sel the eaisting trucks for $10,000 each. The new trucks are abso more fuel efficient and expected to produce fuel and maintenance cost savengs of $3,300 per year The new trucks will also incur cheaper insurance and registation costs, with a $600 initial stwing per truck in Year 1, athough this seving will reduce as the truck ages, with each year's insurance savings calculated at 105 less than the prevous year. Option 2. Atrematively, management could concrete the parking and unionding area to provide a level surface. Tha is expected to cost 565,000 and thely to reduce the indidence of injury by 55%. The company has a required rate of return of 8% on capita mestment projects. (Hint: lgnore depreciation and tax). Required: 1. Identify the annual cashifiows for each option in the table below (Round to the nearest whole dolar). Management is concerned at the rate of occupational injury arising from sprains and strains sustained by drivers exiting trucks on uneven ground in the loading yard. These trip, slip and fall incidents result in an average $55,000 per year in injury management and workers' compensatian costs. Two options for mitigating the risk of injury have been identified. Option 1. Management could replace the two existing 20-year-old trucks with two Argosy Freightiners. The Argosy's saler access and egress design (swing cut staircase) is expected to reduce the risk of trips and falls, and thus knee, anile and back injuries by 95%. The purchase cost for each new wehicle is expected to be: $94,000 plus $1,400 trassfer costs. The company could sel the eaisting trucks for $10,000 each. The new trucks are abso more fuel efficient and expected to produce fuel and maintenance cost savengs of $3,300 per year The new trucks will also incur cheaper insurance and registation costs, with a $600 initial stwing per truck in Year 1, athough this seving will reduce as the truck ages, with each year's insurance savings calculated at 105 less than the prevous year. Option 2. Atrematively, management could concrete the parking and unionding area to provide a level surface. Tha is expected to cost 565,000 and thely to reduce the indidence of injury by 55%. The company has a required rate of return of 8% on capita mestment projects. (Hint: lgnore depreciation and tax). Required: 1. Identify the annual cashifiows for each option in the table below (Round to the nearest whole dolar)
