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Roger and Nicole bought a house 15 years ago for $250,000 whose market value has increased with the rate of inflation, which was on average

Roger and Nicole bought a house 15 years ago for $250,000 whose market value has increased with the rate of inflation, which was on average 5% per year. An appraisal estimates a replacement cost equal to 85% of market value. Their home insurance coverage is $172,470. They have suffered an insured fire loss equal to $125,000. How much will the insurance company pay?

a. $180,000

b. None of the above

c. $120,000

d. $61,000

e. $90,000

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