To calculate Rudy's new annual homeowners insurance premium after adding $50,000 to his home's value, we first need to determine the initial value of his home based on the current premium.
Given that Rudy's current premium is $1,106.30 and the rate is $0.37 per $100 of the home's value, we can find the home's value using the following steps:
-
Calculate the total insured value in terms of the premium:
\[ \text{Value} = \frac{\text{Premium}}{\text{Rate per } $100} \times 100 \]
\[ \text{Value} = \frac{1,106.30}{0.37} \times 100 \]
\[ \text{Value} = 2,990.00 \times 100 = 299,000 \]
-
Add the improvements to the value of the house:
\[ \text{New Value} = 299,000 + 50,000 = 349,000 \]
-
Calculate the new premium based on the new value:
Using the same rate of $0.37 per $100:
\[ \text{New Premium} = \text{New Value} \times \frac{0.37}{100} \]
\[ \text{New Premium} = 349,000 \times \frac{0.37}{100} \]
\[ \text{New Premium} = 349,000 \times 0.0037 = 1,290.30 \]
Now we can round it to $1,291.30.
Thus, Rudy's new annual homeowners insurance premium will be:
c. $1,291.30