AnswersKapuschinskyWCA 3424 Consumer Applications 1st nine weeks 26-27Simple InterestQuestion 72
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QuizMultiple Choice

Simple Interest

Question 72 • (Kapuschinsky)WCA 3424 Consumer Applications 1st nine weeks 26-27

Rudy has been paying an annual homeowners insurance premium of $1,106.30 ($0.37 per $100 of value) since he first purchased his house. For the past six months, Rudy has completed some major improvements to his house to improve its overall value. If Rudy successfully adds $50,000 to the value of his house, what will his new annual homeowners insurance premium be?

Answer
A
$185.00
B
$315.00
C
$1,291.30
D
$1,351.14

Explanation

The premium increases by $0.37 for each $100 of added home value. A $50,000 increase equals 500 units of $100, so the added premium is 500 × $0.37 = $185.00. Add that to the current $1,106.30 premium: $1,106.30 + $185.00 = $1,291.30, which is choice C.

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