An office building that is leased to tenants is insured under a BPP on a replacement cost basis for a limit of $1,400,000 with 80 percent coninsurance and a $1,000 deductible. The building is damaged by a covered peril. Immediately before the loss occurred, the building's actual cash value was $1,600,000, and its replacement cost was $2,000,000. If the building owner has the building repaired at a cost of $800,000, how much will the insurer pay if the insured elects to recover on a replacement cost basis?
[($140,000/(.80 x $200,000)) x $800,000] - $1,000 = $699,000