The Proposal and Related Issues Management at FHP has asked Cascade to consider adding two dry van loads per week; each load would require 1,500 round-trip miles. Because FHP is a long-term client with a strong financial position, the company's management has asked for a very favorable rate of $2.15 per million including FSC and all miscellaneous fees. Roger believes the potential volume of freight from FEP can be used to grow Cascade's business and profitability. There is also risk associated with not taking me new nes. If Cascade does not accept the new routes, another trucking line will, thus building loyalty with FHP. FHP is a stable, solvent company that presents no question of collection, thus ensuring a reliable cash flow. If FHP decides to restructure its supply chain in the future, Cascade could find itself in the undesirable position of holding dedicated assets (trucks and trailers) for routes that no longer exist. The owner's aversion to increased debt levels further exacerbates concerns about acquiring additional fixed assets. Perhaps Cascade could service the initial demand with existing equipment. But, as additional routes are added in the future, Cascade must acquire more tractor-trailer rigs or consider outsourcing the miles by using independent contractors. Exhibit 1 presents Cascade Trucking and Freight's income from operations for the year ending December 31, 2013. This statement is not prepared in accordance with Generally Accepted Accounting Principles (GAAP) but presents costs by behavior. Exhibit 2 presents Cascade Trucking and Freight's balance sheet for the year ending December 31, 2013.