Practice gce model questions vol1 commerce 2017 Past Questions

Question 1 View Details

A consumer buys a television with a marked price of $120{,}000$ Naira. The seller offers a $10\%$ discount and a promotional cash rebate of $2\%$ of the discounted price because the consumer registers late. After the rebate the consumer pays a service charge of $3\%$ on the amount after rebate. The TV later develops a fault and requires a repair costing $15{,}000$ Naira. The warranty covers $80\%$ of the repair cost after a deductible of $2{,}000$ Naira is applied. Calculate the consumer's total out‑of‑pocket expenditure and state whether the consumer made a profit or a loss compared with the original marked price.

A. Total out‑of‑pocket = ₦111,615.20; consumer lost ₦8,384.80 (loss).

B. Total out‑of‑pocket = ₦110,500.50; consumer saved ₦9,499.50 (profit).

C. Total out‑of‑pocket = ₦112,000.00; consumer saved ₦8,000.00 (profit).

Correct D. Total out‑of‑pocket = ₦111,615.20; consumer saved ₦8,384.80 (profit).

Correct Answer: D

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Question 2 View Details

A shop sells $150$ notebooks at $\text{₦}$$250$ each. It incurs a flat delivery charge of $\text{₦}$$2{,}000$ and must pay a sales tax of $5\%$ on the total sales value (excluding delivery). Determine the shop's gross sales value and its net revenue after adding the delivery charge and subtracting the tax.

Correct A. Gross sales = ₦37,500; Net revenue = ₦37,625.

B. Gross sales = ₦37,500; Net revenue = ₦37,500.

C. Gross sales = ₦37,500; Net revenue = ₦36,625.

D. Gross sales = ₦38,000; Net revenue = ₦38,900.

Correct Answer: A

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Question 3 View Details

A wholesaler purchases a product from a manufacturer at $\text{₦}$$80$ per unit. If the order exceeds $500$ units, a volume discount of $5\%$ is applied to the total purchase price. An order handling fee of $\text{₦}$$1{,}200$ is charged per order. The wholesaler sells each unit to retailers at a markup of $30\%$ on his effective cost per unit (including any discount and the allocated handling fee). To achieve a profit of at least $\text{₦}$$10{,}000$ on the order, what is the minimum number of units the wholesaler must purchase? (Assume the smallest integer quantity that satisfies the condition.)

A. 410

B. 401

Correct C. 402

D. 403

Correct Answer: C

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Question 4 View Details

A company allocates a total advertising budget of $\text{₦}$$500{,}000$ across three media: TV (40\%), radio (35\%) and internet (25\%). The estimated reach per Naira spent is 0.8 persons for TV, 1.2 persons for radio and 2.5 persons for internet. (a) Calculate the number of persons reached by each medium. (b) Assuming no overlap, find the total reach. (c) Determine the overall average reach per Naira spent for the whole campaign.

A. TV: 180,000 persons; Radio: 210,000 persons; Internet: 312,500 persons; Total reach: 702,500 persons; Average reach per Naira: 1.405 persons.

Correct B. TV: 160,000 persons; Radio: 210,000 persons; Internet: 312,500 persons; Total reach: 682,500 persons; Average reach per Naira: 1.365 persons.

C. TV: 160,000 persons; Radio: 210,000 persons; Internet: 300,000 persons; Total reach: 670,000 persons; Average reach per Naira: 1.340 persons.

D. TV: 150,000 persons; Radio: 210,000 persons; Internet: 312,500 persons; Total reach: 672,500 persons; Average reach per Naira: 1.345 persons.

Correct Answer: B

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Question 5 View Details

A trader imports $20$ tonnes of cocoa beans at a cost of $\text{₦}$$1{,}500$ per kilogram. Freight charges are $\text{₦}$$0.25$ per kilogram and insurance is $2\%$ of the total value of the goods (excluding freight). What is the total landed cost of the shipment?

Correct A. 30,605,000

B. 30,600,000

C. 30,605,100

D. 30,005,000

Correct Answer: A

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Question 6 View Details

A logistics firm has two truck types. Type A uses 0.35 L of fuel per kilometre and Type B uses 0.28 L per kilometre. Fuel costs $\text{₦}165$ per litre and the non‑fuel operating cost is $\text{₦}45$ per kilometre for either type. For a job of 800 km the firm wants a profit of 18 % on total cost. Determine the maximum price the client can offer if the firm uses Type A, and state which truck type yields the higher profit per kilometre.

Correct A. Maximum price with Type A = ₦96,996; Type A gives higher profit per kilometre.

B. Maximum price with Type A = ₦96,000; Type A gives higher profit per kilometre.

C. Maximum price with Type A = ₦95,500; Type A gives higher profit per kilometre.

D. Maximum price with Type A = ₦97,200; Type A gives higher profit per kilometre.

Correct Answer: A

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Question 7 View Details

An insurer calculates the base premium for a motor policy as 5 % of the insured value. Because the driver is classified as high‑risk, a loading factor of 1.25 is applied. The driver qualifies for a 10 % no‑claims discount on the loaded premium, and a government tax of 5 % is then added on the discounted amount. If the insured value is $\text{₦}2,500,000$, what is the final premium payable (rounded to the nearest Naira)?

A. ₦147,000

B. ₦148,500

Correct C. ₦147,656

D. ₦146,800

Correct Answer: C

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Question 8 View Details

A whole‑life insurance policy provides a sum assured of $\text{₦}1,200,000$. The annual premium is $\text{₦}48,000$ payable at the start of each year. The policy guarantees a surrender value equal to 30 % of the total premiums paid, provided the policy has been in force for at least 5 years. If the policyholder surrenders the policy after 7 years, calculate the surrender value and state the net gain or loss compared with the total premiums paid.

A. Surrender value = ₦360,000; gain of ₦24,000 compared with premiums paid.

B. Surrender value = ₦86,400; loss of ₦249,600 compared with premiums paid.

Correct C. Surrender value = ₦100,800; loss of ₦235,200 compared with premiums paid.

D. Surrender value = ₦72,000; loss of ₦264,000 compared with premiums paid.

Correct Answer: C

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Question 9 View Details

A telecom provider charges a fixed connection fee of $\text{₦}120$ per call. For the first 10 minutes the rate is $\text{₦}0.45$ per minute; each additional minute beyond the first 10 is charged at $\text{₦}0.30$ per minute. A customer makes a 27‑minute call and receives a promotional discount of 15 % on the total call charge (including the connection fee). What amount does the customer pay, correct to two decimal places?

A. ₦128.16

B. ₦116.64

Correct C. ₦110.16

D. ₦109.91

Correct Answer: C

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Question 10 View Details

A trader imports goods costing $\$8,500$. The exchange rate is $\text{₦}410$ per US dollar. Import duty is 12 % of the value in Naira, and a surcharge of 5 % is levied on the duty amount. Calculate the total cost in Naira, including duty and surcharge.

A. ₦3,828,400

B. ₦3,850,925

Correct C. ₦3,924,110

D. ₦3,903,200

Correct Answer: C

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Question 11 View Details

A Nigerian exporter sells goods priced in US dollars. The invoice amount is $12,000. The buyer pays in naira through a bank that charges a commission of 2 % on the converted amount. The prevailing spot exchange rate is ₦410 per US $, but the bank offers a discount of 1.5 % on the spot rate for the portion of the payment that exceeds $5,000. The goods have insurance of $300 and freight of $800, and a 10 % import duty is levied on the CIF value (cost + insurance + freight). The exporter wishes to earn a profit margin of 12 % on the total landed cost (CIF + duty). What is the minimum amount in naira that the buyer must pay to achieve the exporter's target profit?

A. ₦6,800,123

Correct B. ₦6,679,537

C. ₦6,450,000

D. ₦7,020,000

Correct Answer: B

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Question 12 View Details

A supplier issues an invoice of ₦250,000 with terms "2 % discount if paid within 10 days, net 30". The supplier also offers a 1 % early‑payment discount if the invoice is settled within 20 days; the two discounts cannot be combined. The buyer pays on day 25, so the 2 % discount is missed but the 1 % discount is taken. The supplier charges interest of 0.5 % per month on the outstanding amount for the period after the 10‑day discount window. Calculate (a) the total amount the buyer pays on day 25, and (b) the effective annualised cost of forgoing the 2 % discount in favour of the 1 % discount, assuming a 365‑day year.

Correct A. Total payable: ₦248,119; Effective annual cost: 55.9 %

B. Total payable: ₦247,500; Effective annual cost: 52.3 %

C. Total payable: ₦249,300; Effective annual cost: 58.1 %

D. Total payable: ₦250,000; Effective annual cost: 60.0 %

Correct Answer: A

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Question 13 View Details

A retailer purchases 500 units of a product for a total cost of ₦120,000. Fixed overheads for the month are ₦30,000 and variable overhead is ₦20 per unit sold. The retailer wants a profit margin of 25 % on total revenue. Market research shows that if the selling price exceeds ₦350 per unit, sales will fall to 400 units; otherwise all 500 units are expected to sell. Determine the optimal selling price per unit and the expected profit, stating which sales scenario should be chosen.

A. Optimal price: ₦480 per unit; Expected profit: about ₦30,200 (choose the 400‑unit scenario)

Correct B. Optimal price: ₦527 per unit; Expected profit: about ₦52,700 (choose the 400‑unit scenario)

C. Optimal price: ₦350 per unit; Expected profit: about ₦15,000 (choose the 500‑unit scenario)

D. Optimal price: ₦600 per unit; Expected profit: about ₦70,500 (choose the 400‑unit scenario)

Correct Answer: B

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Question 14 View Details

A business borrows ₦5,000,000 from a bank at a nominal annual interest rate of 12 % payable monthly. The bank deducts an arrangement fee of 1.5 % of the loan amount from the proceeds. The loan is to be repaid in equal monthly instalments over 3 years. If the loan is repaid early after 18 months, a penalty of 0.3 % of the outstanding principal is charged at the time of repayment. Calculate (a) the monthly instalment amount, (b) the total amount paid up to the early repayment (including the penalty), and (c) the effective annual interest rate based on the actual cash received and the total payments made up to early repayment.

A. (a) ₦150,000 per month; (b) ₦2,850,000 total paid; (c) Effective annual rate ≈ -25 % (borrower gains about 25 % per annum)

B. (a) ₦170,000 per month; (b) ₦3,060,000 total paid; (c) Effective annual rate ≈ -35 % (borrower gains about 35 % per annum)

Correct C. (a) ₦166,279 per month; (b) ₦3,001,185 total paid; (c) Effective annual rate ≈ -39 % (i.e., borrower gains about 39 % per annum)

D. (a) ₦180,500 per month; (b) ₦3,250,000 total paid; (c) Effective annual rate ≈ -45 % (borrower gains about 45 % per annum)

Correct Answer: C

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Question 15 View Details

A company receives a purchase order worth ₦2,500,000 with the following payment schedule: 30 % on signing, 40 % after delivery, and the remaining 30 % 60 days after delivery. A volume rebate of 5 % is offered on the portion of the contract value exceeding ₦1,800,000; the rebate is paid with the final instalment. If delivery is delayed by 12 days beyond the agreed 20‑day window, a penalty of 0.2 % per day is applied to the amount due on the delivery payment. Compute (a) the total amount the buyer must pay, (b) the date on which the final payment is due (in days after signing), and (c) the effective annualised cost of the late‑delivery penalty as a percentage of the contract value, assuming a 365‑day year.

A. (a) ₦2,480,000; (b) day 90 after signing; (c) approx 28.5 % per annum

Correct B. (a) ₦2,489,000; (b) day 92 after signing; (c) approx 29.2 % per annum

C. (a) ₦2,500,000; (b) day 92 after signing; (c) approx 27.8 % per annum

D. (a) ₦2,495,000; (b) day 94 after signing; (c) approx 30.1 % per annum

Correct Answer: B

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Question 16 View Details

A home‑based trader buys 30 units of a product at $\text{₦}500$ each. He adds a markup of 25 % on the cost price and then offers a discount of 10 % on the marked price to customers. What profit does he make on each unit?

Correct A. ₦62.5

B. ₦56.25

C. ₦75

D. ₦68.75

Correct Answer: A

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Question 17 View Details

In a partnership, Partner A invests $\text{₦}10{,}000$ for 6 months, Partner B invests $\text{₦}15{,}000$ for the whole 6‑month period, and Partner C invests $\text{₦}12{,}000$ for 5 months (he withdraws after the 5th month). After the 6‑month period the partnership earns a total profit of $\text{₦}21{,}000$, which is to be shared in proportion to each partner's capital multiplied by the time their capital was employed. How much profit does each partner receive?

A. A: ₦6,000; B: ₦8,000; C: ₦7,000

Correct B. A: ₦6,000; B: ₦9,000; C: ₦6,000

C. A: ₦6,500; B: ₦8,500; C: ₦6,000

D. A: ₦5,000; B: ₦10,000; C: ₦6,000

Correct Answer: B

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Question 18 View Details

A wholesaler purchases goods at a unit cost of $\text{₦}150$. Fixed overheads are $\text{₦}45{,}000$ per month. He sells to retailers by applying a 30 % markup on his cost price, but gives a 5 % trade discount on the selling price for orders of 200 units or more. Assuming he sells only in quantities that qualify for the discount, what is the minimum number of units he must sell in a month to achieve a profit of at least $\text{₦}30{,}000$?

A. 2155 units

B. 2100 units

Correct C. 2128 units

D. 2200 units

Correct Answer: C

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Question 19 View Details

A warehouse stocks a single product with an annual demand of 12,000 units. The ordering cost per order is $\text{₦}2{,}500$ and the holding cost is 20 % of the unit cost per year. The unit cost is $\text{₦}80$. The supplier's lead time is 10 days. Demand during lead time is normally distributed with a mean equal to the average daily demand and a standard deviation equal to 10 % of the mean daily demand. To maintain a 95 % service level, determine (a) the economic order quantity (EOQ) and (b) the reorder point (including safety stock).

Correct A. EOQ ≈ 1,937 units; Reorder point ≈ 346 units

B. EOQ ≈ 1,900 units; Reorder point ≈ 360 units

C. EOQ ≈ 1,850 units; Reorder point ≈ 320 units

D. EOQ ≈ 2,050 units; Reorder point ≈ 380 units

Correct Answer: A

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Question 20 View Details

A student deposits $\text{₦}5{,}000$ in a savings scheme that pays simple interest at 6 % per annum for 8 months. How much interest will he earn?

A. ₦300

B. ₦167

C. ₦2400

Correct D. ₦200

Correct Answer: D

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Question 21 View Details

A company can transport goods either by road or by rail. The road option has a fixed cost of $1500$ per trip and a variable cost of $12$ per kilometre. The rail option has a fixed cost of $2500$ per trip and a variable cost of $8$ per kilometre. The distance to be covered is between $200$ km and $500$ km. For which distances is the road option cheaper than the rail option? Also state the distance at which the two options cost the same.

A. Road is cheaper for distances between 200 km and 300 km (excluding 300 km). The two options cost the same at 300 km.

Correct B. Road is cheaper for distances between 200 km and 250 km (excluding 250 km). The two options cost the same at 250 km.

C. Road is cheaper for distances between 200 km and 250 km (including 250 km). The two options cost the same at 250 km.

D. Road is cheaper for distances between 150 km and 250 km (excluding 250 km). The two options cost the same at 250 km.

Correct Answer: B

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Question 22 View Details

A firm needs $2{,}000{,}000$ of capital for a project. It can raise equity (no interest) and a bank loan at 10% per annum. The firm wants the proportion of debt to total capital not to exceed 40% and also wants the annual interest payable to be no more than $150{,}000$. In addition, the loan amount must be a multiple of $50{,}000$. Determine the maximum amount of equity the firm can raise while satisfying all constraints, and state the corresponding loan amount.

A. Maximum equity = $1{,}200{,}000$; corresponding loan = $700{,}000$.

Correct B. Maximum equity = $1{,}200{,}000$; corresponding loan = $800{,}000$.

C. Maximum equity = $1{,}300{,}000$; corresponding loan = $700{,}000$.

D. Maximum equity = $1{,}000{,}000$; corresponding loan = $1{,}000{,}000$.

Correct Answer: B

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Question 23 View Details

A company imports $10{,}000$ units of a product. The supplier quotes a price of €45 per unit. The current exchange rate is £1 = €1.15. The import is subject to a 12% ad valorem tariff on the value in pounds and a fixed handling fee of £1{,}200. Alternatively, the company can pay in euros directly and obtain a 5% discount on the supplier price, thereby avoiding the tariff and the handling fee. Which option results in a lower total cost in pounds, and by how much does it differ from the other option? Give the difference rounded to the nearest pound.

Correct A. Paying in euros with the 5% discount is cheaper; it saves approximately £67,722 compared with the pound‑payment option.

B. Paying in pounds is cheaper; it saves approximately £3,210 compared with the euro‑payment option.

C. Paying in euros with the 5% discount is cheaper; it saves approximately £70,500 compared with the pound‑payment option.

D. Paying in euros with the 5% discount is cheaper; it saves approximately £45,000 compared with the pound‑payment option.

Correct Answer: A

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Question 24 View Details

Three partners A, B and C start a partnership with capital contributions of £30{,}000, £20{,}000 and £10{,}000 respectively. The partnership agreement states that profit is first distributed as a 5% interest on each partner's capital, and the remaining profit is shared in the ratio of their capital contributions. At the end of the year the partnership earned a net profit of £24{,}000 before interest. Calculate the total amount each partner receives.

A. A receives £11,000; B receives £9,000; C receives £4,000.

B. A receives £13,000; B receives £7,000; C receives £4,000.

Correct C. A receives £12,000; B receives £8,000; C receives £4,000.

D. A receives £12,500; B receives £7,500; C receives £4,000.

Correct Answer: C

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Question 25 View Details

A business takes a loan of ₦5{,}000{,}000 from a bank. The nominal annual interest rate is 12% payable monthly (i.e., 1% per month). The bank also charges an upfront processing fee of 2% of the loan amount, which is deducted from the loan proceeds. The loan is to be repaid in equal monthly instalments over 3 years. Determine the effective annual interest rate (EAR) that the business actually pays, taking the processing fee into account, and compute the monthly instalment amount (rounded to the nearest naira).

A. Monthly instalment ≈ ₦160,200; effective annual interest rate ≈ 14.8%

B. Monthly instalment ≈ ₦172,400; effective annual interest rate ≈ 15.0%

C. Monthly instalment ≈ ₦158,300; effective annual interest rate ≈ 13.5%

Correct D. Monthly instalment ≈ ₦165,900; effective annual interest rate ≈ 14.2%.

Correct Answer: D

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