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 Please select the best answer from the choices provided A B C D

Answer 1

`\$157.50`

Explanation:

The computation of the amount pay on monthly basis is shown below:

But before that we need to find out the annual amount pay which is to be find out by applying the following formula

`= Purchase\ value * \frac {insurance\ premium}{percentage}`

where,

Purchase value of the house is $450,000

Insurance premium is $0.42

Percentage is $100

Now put these values to the above formula

So, the annual amount pay is

`= \$450,000 * \frac {\$0.42}{\$100}`

`= \$1,890`

Now the monthly paying amount is

`= (Annual\ amount\ pay)/(total\ number\ of\ months\ in\ a\ year)`

=
`(\$1,890)/(12\ months)`

`= \$157.50`