Solve the Problem. -Pelican Lumber Company Owns a Building with a Replacement Cost

question 106

Multiple Choice

Solve the problem.
-Pelican Lumber Company owns a building with a replacement cost of $738,000 which is insured for $531,360 with an 80% coinsurance clause. The building has a fire loss of $20,500. How much will the insurance company pay?

• A)$20,500
• B)$18,450
• C)$14,760
• D)$22,140

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Definitions:

Equilibrium Price

The equilibrium price is the market price at which the quantity of goods supplied equals the quantity demanded, leading to a balance in the market.

Market

A space or system in which parties engage in exchange, buying and selling goods and services.

Price

The monetary total projected, essential, or disbursed as payment for an item.

Equilibrium Price

The price in the market where the amount of goods available matches the amount of goods people want to buy.