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20 October, 13:06

Bill Blum insured his hardware store with a fire insurance policy for $88,000 at a cost of $0.84 per $100. Ten months later his insurance company canceled his policy as a result of failure to correct a fire hazard. The cost of the policy to Bill was:

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  1. 20 October, 14:15
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    Answer:$616

    Explanation:

    The insurance policy is a policy on an annual basis in which premium are paid in advance to enable the insurance firm to provide cover for the clients.

    Cost of insurance

    $0.84 * ($88000/100)

    = $732.92 per annum

    However since the insurance was cancelled after 10 months he will only be responsible for 10 months.

    $739.2/12*10

    =$616
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