Solve the Problem. -Custom Dry Cleaners Owns a Building with a Replacement Cost

question 28

Multiple Choice

Solve the problem.
-Custom Dry Cleaners owns a building with a replacement cost of $239,000 which is insured for $162,520 with an 80% coinsurance clause. The building has a fire loss of $10,100. How much will the insurance company pay?

• A)$10,302
• B)$10,100
• C)$6,868
• D)$8,585

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Definitions:

Owner Financing

A method of financing in which the seller of a property provides a loan to the buyer directly, often with flexible terms.

Creditors Or Lenders

Individuals or institutions that lend money or extend credit to others, with the expectation of being repaid with interest.

Revenues

The total amount of money received by a company for goods sold or services provided during a certain period of time.

Equity

The value of an ownership interest in property, including shareholders' equity in a corporation, representing assets minus liabilities.