Question

In: Finance

You own a house that costs $1 million. You buy a $20,000 insurance policy to compensate...

You own a house that costs $1 million. You buy a $20,000 insurance policy to compensate you for damage to the house. The dectible is $40,000. How much is the maximum that the insurance company may pay for the damage on your house.

  

less than 500,000

   

higher thatn 500,000 but less than 700,000.

   

higher thatn 700,000 but less than 900,000.

   

higher thatn 900,000 but less than 1,1000,000.

   

Higher than 1,100,000.

Solutions

Expert Solution

Solution-

Cost of the house =$10,00,000

Amount of insurance policy purchased =$20,000

Maximum amount that insurance company pay for damage = ($10,00,000/40000)*20000= $5,00,000

Hence answer is less than 5,00,000


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