Let's solve the problem step-by-step.
First, let's determine the minimum insurance coverage amount. The minimum insurance coverage amount is the total value that needs to be insured, which includes both the cost of the goods and the total freight.
1. Cost of Goods: [tex]$10,000
2. Total Freight: $[/tex]1,000
So, to determine the minimum insurance coverage amount, we sum these values:
[tex]\[
\text{Minimum Insurance Coverage Amount} = \text{Cost of Goods} + \text{Total Freight}
\][/tex]
[tex]\[
\text{Minimum Insurance Coverage Amount} = \$10,000 + \$1,000 = \$11,000
\][/tex]
Next, let's calculate the insurance premium. The insurance premium is a percentage of the insured amount, which in this case is 0.50%.
3. Insurance Rate: 0.50%
The formula to calculate the insurance premium is:
[tex]\[
\text{Insurance Premium} = \text{Minimum Insurance Coverage Amount} \times \text{Insurance Rate}
\][/tex]
[tex]\[
\text{Insurance Premium} = \$11,000 \times 0.50\% = \$11,000 \times 0.005 = \$55.0
\][/tex]
So, the minimum insurance coverage amount is [tex]$11,000 and the insurance premium is $[/tex]55.00.
