1. ABC company insured its building on a replacement cost basis for $700,000 under a property insurance policy that included an 80 percent coinsurance clause. The building has a replacement cost of $1 million when it sustained a $25,000 loss. How much will ABC Company receive from its insurer, assuming no deductible applies?

   1. $56,000

   2. $21,875

   3. $700,000

   4. $20,000