Oliver and his family have home insurance policy that covers the home for $300,000 and personal property up to 40% of the value of the house. The policy also covers additional living expenses while the home is under repair. Recently, a wind broke a tree branch that fell on the side of the house breaking part of the roof a corner wall. A refrigerator inside the house was also damaged. The cost to repair the house is estimated at $35,000 and the family need to stay at a motel for one week incurring $12,500. The refrigerator was purchased 5 years ago for $6,000. Its current replacement price is $7,500. It has estimated life of 10 years.

a) How much would the family receive from the insurance policy for the home and the additional living expenses?

b) How much would the family receive for the damaged refrigerator under (i) the actual cash value method, (ii) under the replacement cost method?