Question

Greg just purchased a house for $450,000. His annual homeowners insurance premium is $0.42 per $100 of value. If his annual premium is divided into equal monthly payments, what will Greg have to pay on a monthly basis to keep his home insured? a. $1,890.00 b. $157.50 c. $1,575.00 d. $131.25

Answer 1

First find the annual insurance premium.

They pay $0.42 per $100, so find how many hundreds are in $450000 and multiply by 0.42

(450000/100)(0.42) = 1890

If this is how much paid per year, divide this by 12 to get the monthly payment.

1890/12 = 157.50

The answer is therefore b

Answer 2

`(1)/(12) \left( 450000 \cdot (0.42)/(100) \right) = \$157.50`

Choice b