Jerry Has a Property Insurance Policy on a Building That

Multiple Choice

Jerry has a property insurance policy on a building that would cost $200,000 to replace. His insurance policy is written on an actual cash value basis. His building suffers fire damage that has a replacement cost of $50,000. The building is 2 years old, with an estimate useful life of 20 years. How much will he collect for the fire damage?

A) $5,000
B) $10,000
C) $25,000
D) $45,000