Gce Model Questions Vol1 2017 Commerce Question 23

Practice objective / multiple choice question 23 from the 2017 Gce Model Questions Vol1 Commerce examination.

Gce Model Questions Vol1 2017 Commerce Objective / Multiple Choice Medium Difficulty
Question 23 GCE_MODEL_QUESTIONS_VOL1 • 2017 • COMMERCE • objective

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.

Answer Options

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

About This Question

This is Gce Model Questions Vol1 2017 Commerce Question 23. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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