Gce Model Questions Vol1 2020 Commerce Question 4

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

Gce Model Questions Vol1 2020 Commerce Essay / Theory
Topic: Foreign Trade
Question 4 GCE_MODEL_QUESTIONS_VOL1 • 2020 • COMMERCE • essay

A Nigerian cocoa exporter has a contract to sell 10,000 kg of cocoa beans to a European buyer at €2 per kilogram. The current exchange rate is ₦550 per €1. The exporter must pay a 5 % export duty and a 2 % shipping‑insurance charge on the total FOB value (in Naira). The importing country imposes a 10 % tariff, which is paid by the buyer and does not affect the exporter’s receipts.

Question Parts

( a )
Calculate the total FOB value of the shipment in Naira.
( b )
Determine the total amount the exporter receives after deducting the export duty and shipping‑insurance charge.
( c )
If the exchange rate moves to ₦600 per €1, what would be the exporter’s net receipt in Naira (assuming the same duty and insurance percentages)?
( d )
Discuss the advantages and disadvantages for the exporter of entering a forward contract to lock in the current exchange rate of ₦550/€.

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About This Question

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

The question covers Foreign Trade .

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