Alfred lost his 3 year old camera. It cost him $200 three years ago and had a life expectancy of 6 years. Alfred has actual cash value insurance on this camera, which means his insurance company will issue him a check for for his loss. A new camera costs $500.a) $100

b) none of the above

c) $500

d) $200

Option "A" is the correct answer to the following question.

Explanation:

Given:

Actual cost of camera = $500

Alfred cost of camera = $200

Life expectancy = 6 years

Remain life of camera = (6 - 3) years = 3 years

Computation of the current cost of the camera:

The current cost of camera = Alfred cost of camera × (Remain life of camera / Life expectancy)

Current cost of camera = $200 × (3/6)

Current cost of camera = $100

Therefore, the insurance company will pay $100 to Alfred.

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