A commercial building is insured under a fire policy that has a face value of 80% of

Question:

A commercial building is insured under a fire policy that has a face value of 80% of the building’s appraised value. The annual insurance premium is 3/8% of the face value of the policy and the premium for one year amounts to $675.
(a) What is the face value of the policy?
(b) What is the appraised value of the building?

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