Under a cash value policy, the loss of a $600 item with an estimated life of five years that was purchased three years ago and has a replacement cost of $900 would result in a payment from the insurance company of

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The loss of a $600 item with an estimated life of five years that was purchased three years ago and has a replacement cost of $900 would result in a payment from the insurance company of $240. This is because the item has depreciated by 3/5 of its original value, so the insurance company would only pay 2/5 of the replacement cost.

Under a Cash Value Policy, the Loss of a $600