ABC Company insured its building on a replacement cost basis for $700,
ABC Company insured its building on a replacement cost basis for $700,000 under a property insurance policy that included an 80 percent coinsurance clause.
The building had a replacement cost of $1 million when it sustained a $40,000 loss. How much will ABC Company receive from its insurer, assuming no deductible applies?
A) $33,333
B) $35,000
C) $36,000
D) $40,000
ANSWER
Answer: B
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