Risk Mgt HW Ch. 09

Risk Mgt HW Ch. 09 - $190,000 collected from insurer 3b If...

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Chapter 9 AQ’s 2) Purchase Price = $5000 Depreciation = 50% Replacement cost = $6000 Actual Cash Value = Replacement Cost – Depreciation ACV = $6000 – ($5000 * 50%) ACV = $6000 – $2500 $3500 collected from insurer 3a) Purchase Price = $200,000 Age = 20 years Useful Life = 80 years Replacement Cost = $240,000 Actual Cash Value = Replacement Cost – Depreciation Depreciation = $200,000/80 years = $2,500/year * 20 years = $50,000 ACV = $240,000 – $50,000
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Unformatted text preview: $190,000 collected from insurer 3b) If the loss occurs in a state with a valued policy law, Taylor will collect face value = $200,000 5) Megan would collect $12,000 for the loss of her antique table because under a valued policy, the face amount of insurance will be paid if a total loss occurs. Even though the table’s estimated market value at the time was only $10,000, she will still collect the amount it was originally insured for....
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This note was uploaded on 04/08/2008 for the course FIN 381 taught by Professor Knowles during the Spring '08 term at Bryant.

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