Question: Some homeowners insurance policies include automatic inflation coverage based on the U.S. Commerce Departments construction cost index (CCI). Each year, the property insurance coverage is
Some homeowner’s insurance policies include automatic inflation coverage based on the U.S. Commerce Department’s construction cost index (CCI). Each year, the property insurance coverage is increased by an amount based on the change in the CCI. Let f (t) be the CCI at time t years since January 1, 1990, and let f (0) = 100. Suppose that the construction cost index is rising at a rate proportional to the CCI and the index was 115 on January 1, 1992. Construct and solve a differential equation satisfied by f(t). Then, determine when the CCI will reach 200.
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y ky k0 y0 100 y2 115 dy 1 dt y k Assuming y 0 dy k dt ... View full answer
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