Practice Post UTME MADONNA UNIVERSITY commerce 2018 Past Questions

Question 1

A company is considering the purchase of an insurance policy to protect against potential losses due to natural disasters. Which of the following types of insurance would be most suitable for this purpose?

Correct A. Property Insurance

B. Liability Insurance

C. Business Interruption Insurance

D. Key Person Insurance

Correct Answer: A

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Question 2

A sole trader is considering the purchase of a new business premises. The premises is currently occupied by a tenant who has a 5-year lease remaining. What type of risk is the sole trader exposed to?

A. Market Risk

B. Credit Risk

Correct C. Leasehold Risk

D. Operational Risk

Correct Answer: C

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Question 3

A company is considering the use of just-in-time (JIT) inventory management system. What are the benefits of JIT?

A. Reduced inventory costs

B. Improved customer service

C. Increased efficiency

Correct D. All of the above

Correct Answer: D

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Question 4

A company is considering the use of a warehouse management system (WMS) to manage its inventory. What are the benefits of WMS?

A. Improved inventory accuracy

B. Reduced labor costs

C. Increased efficiency

Correct D. All of the above

Correct Answer: D

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Question 5

A company is considering the use of a marketing automation system (MAS) to manage its marketing campaigns. What are the benefits of MAS?

A. Improved lead generation

B. Reduced marketing costs

C. Increased efficiency

Correct D. All of the above

Correct Answer: D

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Question 6

In a perfectly competitive market, the supply curve is perfectly elastic, and the demand curve is perfectly inelastic. What is the effect on the equilibrium price and quantity?

Correct A. The equilibrium price increases, and the equilibrium quantity decreases.

B. The equilibrium price decreases, and the equilibrium quantity increases.

C. The equilibrium price remains the same, and the equilibrium quantity remains the same.

D. The equilibrium price and quantity are undefined.

Correct Answer: A

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Question 7

A company has a capital structure consisting of 60% debt and 40% equity. The cost of debt is 8%, and the cost of equity is 12%. What is the weighted average cost of capital (WACC)?

A. 6%

B. 8%

Correct C. 10%

D. 12%

Correct Answer: C

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Question 8

A firm is considering two investment projects. Project A has a 5-year life, and Project B has a 10-year life. Both projects have the same initial investment of ₦100,000. Project A has a cash inflow of ₦20,000 per year for 5 years, while Project B has a cash inflow of ₦10,000 per year for 10 years. Which project has a higher net present value (NPV)?

A. Project A

Correct B. Project B

C. Both projects have the same NPV.

D. Neither project has a positive NPV.

Correct Answer: B

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Question 9

A consumer has a budget of ₦1,000,000 and a utility function given by U(x,y) = 2x + 3y. The prices of x and y are ₦500 and ₦200, respectively. What is the optimal bundle of x and y that maximizes utility?

A. x = 1000, y = 2500

Correct B. x = 1500, y = 2000

C. x = 2000, y = 1500

D. x = 2500, y = 1000

Correct Answer: B

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Question 10

A firm is considering a new product launch. The product has a fixed cost of ₦500,000 and a variable cost of ₦100 per unit. The selling price of the product is ₦200 per unit. What is the break-even point in units?

A. 5000 units

Correct B. 10,000 units

C. 20,000 units

D. 50,000 units

Correct Answer: B

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Question 11

In a production process, what is the primary goal of specialization?

Correct A. Increased efficiency

B. Reduced costs

C. Improved quality

D. Enhanced innovation

Correct Answer: A

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Question 12

A consumer purchases a product with a price of ₦1,500. If the sales tax rate is 8%, calculate the amount of sales tax paid.

Correct A. ₦120

B. ₦150

C. ₦180

D. ₦200

Correct Answer: A

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Question 13

A company has a warehouse with a capacity of 10,000 units. If the current stock level is 8,000 units, what is the percentage of available space?

Correct A. 80%

B. 70%

C. 60%

D. 50%

Correct Answer: A

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Question 14

A business owner wants to purchase a liability insurance policy with a premium of ₦50,000. If the deductible is ₦10,000, what is the excess?

A. ₦40,000

B. ₦30,000

C. ₦20,000

Correct D. ₦10,000

Correct Answer: D

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Question 15

A company has a production process with a fixed cost of ₦500,000 and a variable cost of ₦100 per unit. If the selling price is ₦150 per unit, what is the break-even point?

A. 5,000 units

Correct B. 10,000 units

C. 15,000 units

D. 20,000 units

Correct Answer: B

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Question 16

A company's production function is given by Q = 100L^0.5K^0.5, where Q is the quantity produced, L is the units of labor, and K is the units of capital. If the company wants to increase its production by 20% while keeping labor constant, what percentage increase in capital is required?

A. 10%

B. 20%

C. 30%

Correct D. 36%

Correct Answer: D

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Question 17

A firm's demand function is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the firm's revenue is given by R = PQ, find the price at which the firm's revenue is maximized.

A. 15

B. 20

Correct C. 25

D. 30

Correct Answer: C

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Question 18

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's budget constraint is given by 2x + 3y = 12, find the optimal quantities of x and y that maximize the consumer's utility.

A. 2

Correct B. 3

C. 4

D. 5

Correct Answer: B

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Question 19

A firm's production function is given by Q = 100L^0.5K^0.5, where Q is the quantity produced, L is the units of labor, and K is the units of capital. If the firm wants to increase its production by 20% while keeping labor constant, what percentage increase in capital is required?

A. 10%

B. 20%

C. 30%

Correct D. 36%

Correct Answer: D

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Question 20

A firm's demand function is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the firm's revenue is given by R = PQ, find the price at which the firm's revenue is maximized.

A. 15

B. 20

Correct C. 25

D. 30

Correct Answer: C

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Question 21

A company's sole trader is considering the purchase of a new warehouse. The warehouse costs ₦5,000,000 and has a useful life of 10 years. The company expects to earn an annual revenue of ₦1,500,000 from the warehouse. The company's tax rate is 25%. What is the present value of the future cash flows from the warehouse, using a discount rate of 10%?

Correct A. ₦4,500,000

B. ₦5,000,000

C. ₦5,500,000

D. ₦6,000,000

Correct Answer: A

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Question 22

A firm is considering the purchase of a new machine. The machine costs ₦3,000,000 and has a useful life of 8 years. The firm expects to earn an annual revenue of ₦1,200,000 from the machine. The firm's tax rate is 30%. What is the present value of the future cash flows from the machine, using a discount rate of 12%?

A. ₦3,500,000

B. ₦4,000,000

Correct C. ₦4,500,000

D. ₦5,000,000

Correct Answer: C

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Question 23

A company's sole trader is considering the purchase of a new vehicle. The vehicle costs ₦2,500,000 and has a useful life of 5 years. The company expects to earn an annual revenue of ₦900,000 from the vehicle. The company's tax rate is 20%. What is the present value of the future cash flows from the vehicle, using a discount rate of 15%?

A. ₦2,000,000

B. ₦2,200,000

Correct C. ₦2,500,000

D. ₦3,000,000

Correct Answer: C

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Question 24

A firm is considering the purchase of a new machine. The machine costs ₦4,000,000 and has a useful life of 10 years. The firm expects to earn an annual revenue of ₦1,800,000 from the machine. The firm's tax rate is 25%. What is the present value of the future cash flows from the machine, using a discount rate of 10%?

A. ₦4,500,000

Correct B. ₦5,000,000

C. ₦5,500,000

D. ₦6,000,000

Correct Answer: B

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Question 25

A company's sole trader is considering the purchase of a new warehouse. The warehouse costs ₦6,000,000 and has a useful life of 12 years. The company expects to earn an annual revenue of ₦2,400,000 from the warehouse. The company's tax rate is 20%. What is the present value of the future cash flows from the warehouse, using a discount rate of 12%?

A. ₦6,500,000

B. ₦7,000,000

Correct C. ₦7,500,000

D. ₦8,000,000

Correct Answer: C

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