David owns a commercial building with a current replacement


David owns a commercial building with a current replacement cost of $4 million. The building is presently insured on a replacement cost basis for $3 million under a fire insurance policy that has an 80 percent coinsurance clause. How much will David collect if the building now sustains a covered fire loss with a cost of $320,000 to repair/replace the damage? Assume no deductible applies.

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Operation Management: David owns a commercial building with a current replacement
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