PFIN 5th Edition by Randall Billingsley,Lawrence Gitman,Michael Joehnk

Exercise 4

Collecting on a homeowner's insurance claim. Jennifer Aranda's home in Seattle was recently gutted in a fire. Her living and dining rooms were completely destroyed, and the damaged personal property had a replacement value of $25,000. The average age of the damaged personal property was 5 years, and its useful life was estimated to be 15 years. What is the maximum amount the insurance company would pay Jennifer assuming that it reimburses losses on an actual cash-value basis?