XYZ Company Insured Its Building on a Replacement Cost Basis

Multiple Choice

XYZ Company insured its building on a replacement cost basis for $450,000 under a property insurance policy that included an 80 percent coinsurance clause.The building had a replacement cost of $500,000 when it sustained a $50,000 loss.How much will XYZ Company receive from its insurer,assuming no deductible applies?

A) $42,500
B) $45,000
C) $50,000
D) $56,250