Question

a homeowner in a coastal area is considering additional flood coverage for their home insurance. the house is valued at $400,000, and the additional flood coverage adds 0.2% to the premium. what would be the annual cost of the additional coverage? $600 $800 $1,000 $400

Explanation:

Step1: Convert percentage to decimal

To find the additional cost, we first convert the percentage \(0.2\%\) to a decimal. We know that to convert a percentage to a decimal, we divide by 100. So, \(0.2\%=\frac{0.2}{100} = 0.002\).

Step2: Calculate the additional cost

The house is valued at \(\$400,000\). The additional cost is the value of the house multiplied by the decimal form of the percentage increase. So we calculate \(400000\times0.002\).
\(400000\times0.002 = 800\).

Answer:

\(\$800\) (corresponding to the option with \(\$800\))