Earl Miller insured his pizza shop for $180,000 for fire insurance at an annual

Question

Earl Miller insured his pizza shop for $180,000 for fire insurance at an annual rate per $100 of $0.66. At the end of 3 months, Earl canceled the policy since his pizza shop went out of business. (Use Table 20.4.)

What was the cost of Earl’s premium and his refund? (Round your answers to the nearest cent.)

TABLE 20.4 Percent of annual rate to be charged 52% 61 67 74 81 87 96 100 Time policy is Percent of annual rate Time policy Is in force in force to be charged Fire insurance short-rate and cancellation table Days: 5 10 20 25 Months:1 3% 10 15 17 19 27 35 Months: 5 6 10 3 4.

Explanation / Answer

First we need to determine how much Earl was spending every month:

180,000/100=1800

1800×0.66= $ 1188

Then multiply by 3 months:

1188×3=$ 3564

Therefore, the amount of refund will be $ 3564.

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