Gce Model Questions Vol1 2019 Commerce Question 8

Practice objective / multiple choice question 8 from the 2019 Gce Model Questions Vol1 Commerce examination.

Gce Model Questions Vol1 2019 Commerce Objective / Multiple Choice Medium Difficulty
Question 8 GCE_MODEL_QUESTIONS_VOL1 • 2019 • COMMERCE • objective

An insurance company offers a two‑year motor policy. The base annual premium for a certain class of vehicle is \(45{,}000\) ₦. A fire‑risk loading of 12 % is added, then a 5 % discount is given to drivers with no claim record in the previous three years. For policies bought for two years in advance, a further 8 % discount is applied to the total premium after the previous adjustments. Calculate the total amount payable by a driver with a clean claim record who purchases a two‑year policy. Then, if the expected number of claims per policy per year is 0.04 and the average claim cost is \(150{,}000\) ₦, find the expected profit per policy over the two‑year period (ignore expenses).

Answer Options

Correct Answer A. Total payable = ₦88,099.20; Expected profit = ₦76,099.20
B. Total payable = ₦78,660.00; Expected profit = ₦66,660.00
C. Total payable = ₦95,760.00; Expected profit = ₦83,760.00
D. Total payable = ₦92,736.00; Expected profit = ₦80,736.00
Correct Answer
A
Correct Option:
Total payable = ₦88,099.20; Expected profit = ₦76,099.20

About This Question

This is Gce Model Questions Vol1 2019 Commerce Question 8. It is one of the objective questions from the 2019 Gce Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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