Question

parker is considering a homeowner’s insurance policy that offers coverage of $200,000. the insurance policy has a premium rate of 0.25% annually. what is the annual premium that parker would need to pay? enter your answer in the box below. $\square$

Explanation:

Step1: Convert percentage to decimal

To use the percentage rate in a calculation, we convert \(0.25\%\) to a decimal. We know that to convert a percentage to a decimal, we divide by 100. So, \(0.25\%=\frac{0.25}{100} = 0.0025\).

Step2: Calculate the annual premium

The annual premium is calculated by multiplying the coverage amount by the premium rate (in decimal form). The coverage amount is \(\$200,000\) and the rate is \(0.0025\). So, the annual premium \(P=200000\times0.0025\).
Calculating \(200000\times0.0025\), we get \(200000\times0.0025 = 500\).

Answer:

500