zach is looking for a homeowners insurance policy for his new house. aaa insurance company has offered him a…

zach is looking for a homeowners insurance policy for his new house. aaa insurance company has offered him a plan that insures his home annually for $0.36 per $100 of value in the home. in order to make calculations easier, thompsons insurance lists their annual homeowners insurance premium a bit differently, at $3.63 per $1,000 of value in the home. zachs house is worth $289,000. what should zach be thinking as he chooses between the two insurance companies? a. $3.63 per $1,000 is approximately the same as $0.36 per $100. the premiums for the two insurance companies will be the same. b. the annual premium for his house would be cheaper through aaa. c. the annual premium for his house would be cheaper through thompsons. d. since the two insurance companies list their premiums differently, the two cannot be compared. please select the best answer from the choices provided

zach is looking for a homeowners insurance policy for his new house. aaa insurance company has offered him a plan that insures his home annually for $0.36 per $100 of value in the home. in order to make calculations easier, thompsons insurance lists their annual homeowners insurance premium a bit differently, at $3.63 per $1,000 of value in the home. zachs house is worth $289,000. what should zach be thinking as he chooses between the two insurance companies? a. $3.63 per $1,000 is approximately the same as $0.36 per $100. the premiums for the two insurance companies will be the same. b. the annual premium for his house would be cheaper through aaa. c. the annual premium for his house would be cheaper through thompsons. d. since the two insurance companies list their premiums differently, the two cannot be compared. please select the best answer from the choices provided

Answer

Explanation:

Step1: Calculate premium for AAA Insurance

For AAA Insurance, cost per ($100) is ($0.36). The value of the house (V = $289000). Number of ($100) units (n=\frac{289000}{100}=2890) Premium for AAA (P_{AAA}=0.36\times2890 = 1040.4)

Step2: Calculate premium for Thompson's Insurance

For Thompson's Insurance, cost per ($1000) is ($3.63). Number of ($1000) units (m=\frac{289000}{1000}=289) Premium for Thompson's (P_{Thompson}=3.63\times289=1059.07)

Answer:

B. The annual premium for his house would be cheaper through AAA.