Problema Solution
Most insurance companies will replace a vehicle any time an estimated repair exceeds 80% of the "blue book" value of the vehicle. Michelle's insurance company paid $8400 for repairs on her car after an accident. What can b concludedabout the book value of the car?
Answer provided by our tutors
If the insurance company decided to pay for the repairs ($8,400) rather than replace the vehicle, this must mean that the repairs ($8,400) cost less than 80% of the total 'blue book' value of the vehicle. Therefore we can write:
80% of 'blue book' value is greater than or equal to $8,400
Therefore, the minimum cost of the car would be when $8400 is equal to 80% of the 'blue book' value. Therefore we can write:
80%(min car cost)=8400
(min car cost)=8400/.8
(min car cost)=$10,500
We know that the car must cost more than this in order for the insurance company to pay for repairs.