The value of Ruth's business fluctuates periodically, which is largely due to fluctuations in the...
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Finance
The value of Ruth's business fluctuates periodically, which is largely due to fluctuations in the value of inventory on hand. Ruth's property insurance policy requires periodic reporting of business personal property. The limit of insurance is $500,000.
(a) Ruth believes that she can save money by under-reporting the value of inventory. Last period, she reported only $300,000 when the actual value was $400,000. Shortly after filing the last report, the value of the inventory increased to $500,000. The inventory was totally destroyed when a fire occurred. Ignoring any deductible, what is the amount that Ruth's insurer will pay?
(b) Last period, she correctly reported the inventory value of $400,000. Shortly after filing the last report, the value of the inventory increased to $500,000. The inventory was totally destroyed when a fire occurred. Ignoring any deductible, what is the amount that Ruth's insurer will pay?
(c) Last period, she correctly reported the inventory value of $400,000. Shortly after filing the last report, the value of the inventory increased to $600,000. The inventory was totally destroyed when a fire occurred. Ignoring any deductible, what is the amount that Ruth's insurer will pay?
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