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Problem Set 6
1. For each of the following situations, what amount would the
insurance company pay?
a. Wind damage of $835; the insured has $500 deductible.
b. Theft of a stereo system worth $1,300; the insured has a $250
deductible.
c. Vandalism that does $425 of damage to a home; the insured has a
$500 deductible.
2. Beverly and Kyle Nelson currently insure their cars with separate
companies paying $650 and $575 a year. If they insure both cars with
the same company, they would save 10 percent on the annual
premiums. What would be the future value of the annual savings over
ten years based on an annual interest rate of 6 percent?