Scenario 4: Auto Insurance John drives a car valued at \( \$ 25,000 \). His auto insurance policy has two main components Collision Coverage: Costs \( \$ 2.60 \) per \( \$ 1,000 \) of vehicle value annually. 1. Calculate the annual cost of collision coverage. o Formula: Cost \( =( \) Value of car \( / 1,000) \times \) Cost per \( \$ 1,000 \) 1. Claty Coverage: A fee of \( \$ 400 \) per year. 2. Calculate the total annual cost of her auto insurance. o Total Cost = Collision Coverage Cost + Liability Coverage

Sure, let's break down the calculations step by step for John's auto insurance costs. ### 1. **Calculate the Annual Cost of Collision Coverage** **Given:** - **Value of the Car:** \$25,000 - **Cost per \$1,000 of Vehicle Value:** \$2.60 **Formula:** \[ \text{Collision Coverage Cost} = \left( \frac{\text{Value of Car}}{1,000} \right) \times \text{Cost per \$1,000} \] **Calculation:** \[ \begin{align*} \text{Collision Coverage Cost} &= \left( \frac{\$25,000}{1,000} \right) \times \$2.60 \\ &= 25 \times \$2.60 \\ &= \$65 \text{ annually} \end{align*} \] ### 2. **Calculate the Total Annual Cost of Auto Insurance** **Given:** - **Liability Coverage Fee:** \$400 per year - **Collision Coverage Cost:** \$65 per year (from above) **Formula:** \[ \text{Total Annual Cost} = \text{Collision Coverage Cost} + \text{Liability Coverage} \] **Calculation:** \[ \begin{align*} \text{Total Annual Cost} &= \$65 + \$400 \\ &= \$465 \text{ annually} \end{align*} \] ### **Summary** - **Annual Collision Coverage Cost:** \$65 - **Annual Liability Coverage Cost:** \$400 - **Total Annual Auto Insurance Cost:** **\$465** John's total annual auto insurance expense for both collision and liability coverage is **\$465**.