1. Four years ago, Faridah bought a washing machine for RM1,500 and insured all her home assets on an actual cash value basis. Recently, the washing machine was totally destroyed during a big flood four. The propertys value had depreciated by 40 percent at the time of loss. Because of 10 percent inflation, all prices increase in this range, including prices of similar washing machine. Ignoring any deductibles, how much will Faridah collect from her insurer? Explain your answer.

2. Bryan and Geena had purchased a house 10 years ago. They insured the house for RM650,000 with the clause of replacement cost insurance. The house has a useful life of 100 years with current market fair value of RM700,000. How much will Bryan and Geena collect for their loss, if their house is totally destroyed in fire? Explain your answer.