Waec Model Questions Vol1 2020 Commerce Question 4

Practice essay / theory question 4 from the 2020 Waec Model Questions Vol1 Commerce examination. This question covers Foreign Trade .

Waec Model Questions Vol1 2020 Commerce Essay / Theory
Topic: Foreign Trade
Question 4 WAEC_MODEL_QUESTIONS_VOL1 • 2020 • COMMERCE • essay

A Nigerian importer plans to import 10,000 kg of cocoa beans from Ghana. The world market price is US$2.50 per kilogram. The current official exchange rate is ₦750 per US$. The bank charges a commission of 1.5 % on the foreign‑exchange transaction and a foreign‑exchange surcharge of ₦0.10 per US$ converted. The import duty on cocoa beans is 5 % of the customs value (CIF). Additionally, a tariff of 2 % is imposed on the total customs value after duty.

Question Parts

( a )
Compute the total amount in Naira that the importer must pay to acquire the cocoa beans, including purchase cost, bank charges, surcharge, import duty and tariff.
( b )
If the importer intends to sell the imported cocoa beans at a profit margin of 25 % on the total landed cost (the amount computed in part a), determine the selling price per kilogram in Naira.
( c )
Suppose the naira depreciates by 8 % against the dollar before the payment is made, while the world price of cocoa remains unchanged. Re‑calculate the total landed cost and the new selling price per kilogram required to maintain the same 25 % profit margin. Comment on the effect of the depreciation on the importer’s pricing strategy.

Detailed Solution & Marking Scheme

Get the step-by-step solution, key points required by examiners and detailed marking guidance through the Edcrib AI Tutor.

Reveal Answer

About This Question

This is Waec Model Questions Vol1 2020 Commerce Question 4. It is one of the essay questions from the 2020 Waec Model Questions Vol1 Commerce examination.

The question covers Foreign Trade .

View More Waec Model Questions Vol1 2020 Commerce Questions More Waec Model Questions Vol1 Practice Questions Back to Questions

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support