Final answer:
Under replacement cost coverage, you would receive $855 to replace a destroyed sofa, which is its current market value to purchase a new one, irrespective of its original cost or depreciation.
Step-by-step explanation:
If the student has replacement cost coverage for their four-year-old sofa destroyed by fire, they would receive the current market value of a new similar sofa, which is $855. The calculation of the actual cash value is not needed for replacement cost coverage, as this type of insurance policy provides funds to purchase a new item equivalent to the one lost without considering depreciation.
In this case, the student is asking about how much they would receive with replacement cost coverage for their four-year-old sofa destroyed by fire. Replacement cost coverage is an insurance policy that pays the full cost of replacing an item with a new one, without deducting for depreciation. Since the sofa was four years old and had an estimated life of 8 years, it has depreciated by half its value. Therefore, the student would most likely receive half of the current replacement cost, which would be $427.50.