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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