Ralph wants to purchase a renters insurance policy for his new apartment. His insurance company charges an annual premium of 16.53% of the approximate value of the items he owns and is keeping in his apartment. Below is a list of items Ralph made of the items he has in his apartment that he would like to be insured with his policy. What will Ralph’s annual renters insurance premium be? Ralph's Stuff Value TV $150 VCR $60 DVD Player $100 Stereo $80 Sofa $200 Entertainment Center $100 Microwave $40 Coffee Maker $20 Computer $850 Bicycle $200 Coin Collection $600 Pictures/Posters $175 a. $17.88 b. $35.48 c. $214.58 d. $425.65

d. $425.65

Explanation:

Since insurance company charges annual premium on all of the Ralph's items as a percentage of the approximate value, we have to add all the values.

Ralph's total assets =

Television                    $150

VCR                               $60

DVD Player                  $100

Stereo                            $80

Sofa                              $200

Entertainment Center  $100

Microwave                     $40

Coffee Maker                $20

Computer                    $850

Bicycle                         $200

Coin Collection           $600

Pictures/Posters           $175  

Total stuff value       $2,575

Given, Annual insurance premium = 16.53% = 0.1653

Ralph’s annual renters insurance premium will be = $2,575 × 0.1653

Ralph’s annual renters insurance premium = $425.65

Therefore, option D is the correct answer.

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