Final answer:
To find Tom's home value based on the 80% co-insurance requirement, divide the insurance coverage ($320,000) by 0.8 to get $400,000. Therefore, the value of Tom's home is C) $400,000.
Step-by-step explanation:
To determine the value of Tom's home based on the requirement to meet the 80% level of co-insurance, you would calculate the total home value by dividing the required insurance coverage by the percentage of coverage.
In this case, Tom must insure his home for a minimum of $320,000 to satisfy the 80% co-insurance requirement by his lender. Therefore, to find the full value of the home, you divide $320,000 by 0.8.
$320,000 รท 0.8 = $400,000
Thus, the value of Tom's home is $400,000, which corresponds to option C.