Practice gce model questions vol1 commerce 2021 Past Questions

Question 1 View Details

An exporter in Nigeria is to receive a payment of US\$$50{,}000$ for a shipment. The receiving bank charges a commission of $1.5\%$ on the Naira amount it converts, and applies a foreign‑exchange rate of $\text{₦}780$ per US\$, but adds a spread of $2\%$ (i.e., it uses a rate $2\%$ lower than the quoted rate). After the conversion, the exporter must also pay a customs duty of $5\%$ on the Naira value of the goods. Assuming the duty is calculated on the converted amount before the commission is deducted, what is the net amount in Naira that the exporter finally receives?

A. 36000000

B. 35264365

Correct C. 35764365

D. 35700000

Correct Answer: C

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Question 2 View Details

A business takes a loan of $\text{₦}2{,}000{,}000$ with a nominal annual interest rate of $12\%$ payable monthly. After six months the bank reduces the nominal rate by $1.5\%$ for the remaining term, and the loan is to be repaid in equal monthly instalments over a total of $24$ months. What is the total interest paid over the whole loan?

A. 250000

B. 240000

C. 235000

Correct D. 238097

Correct Answer: D

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Question 3 View Details

A retailer buys a product at a cost price of $\text{₦}1{,}200$ per unit. Fixed monthly overheads are $\text{₦}150{,}000$. The retailer sells at a markup of $30\%$ on cost price, but offers a bulk discount of $10\%$ on the selling price for any sale exceeding $500$ units in a month. Additionally, a sales tax of $5\%$ is applied on the final selling price after discount. What is the minimum number of units that must be sold in a month to achieve a profit of at least $\text{₦}50{,}000$?

A. 1500

B. 1520

Correct C. 1496

D. 1490

Correct Answer: C

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Question 4 View Details

A company imports $10{,}000$ kg of raw material at a cost of $\text{₦}500$ per kg. The import duty rate is $12\%$ of the CIF value, and an additional surcharge of $3\%$ is applied on the duty amount. What is the total amount payable (cost + duty + surcharge)?

Correct A. 5618000

B. 5628000

C. 5608000

D. 5718000

Correct Answer: A

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Question 5 View Details

A borrower takes a loan of $\text{₦}1{,}000{,}000$ with a nominal annual interest rate of $9\%$ payable annually. The bank also charges an upfront loan‑origination fee equal to $2\%$ of the loan amount, which is deducted from the amount disbursed to the borrower. Additionally, the borrower pays discount points amounting to $1\%$ of the loan amount, also deducted upfront. What is the effective annual interest rate (EAR) that the borrower actually pays, considering the total amount received versus the total amount to be repaid after one year? Express your answer as a percentage rounded to two decimal places.

A. 10.89

B. 13.20

Correct C. 12.37

D. 11.45

Correct Answer: C

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Question 6 View Details

An invoice for 150 units of product X shows a total amount payable of ₦447,300. The invoice applies a discount of $5\%$ on the subtotal (unit price × quantity), then adds sales tax of $12\%$ on the discounted amount, and finally adds a commission of $2\%$ on the amount after tax. Determine the original unit price of product X (in Naira, to the nearest Naira).

Correct A. 2748

B. 3000

C. 2850

D. 2600

Correct Answer: A

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Question 7 View Details

A small shop recorded total revenue of ₦96,000 from 48 sales in one week. If the shop aims to increase its weekly turnover by $25\%$ the following week, what target revenue should it set (in Naira)?

Correct A. 120000

B. 125000

C. 115000

D. 100000

Correct Answer: A

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Question 8 View Details

A company needs to draft a memo for 120 employees that must not exceed two pages. Each page can contain at most 350 words. The memo includes a heading of 12 words and a signature line of 8 words. The body may contain bullet points, each using exactly 7 words, and the bullet points must constitute at least $20\%$ of the total word count of the memo. What is the greatest possible number of bullet points that can be included while respecting the page limit?

Correct A. 97

B. 99

C. 98

D. 96

Correct Answer: A

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Question 9 View Details

A consumer purchased a washing machine for ₦120,000. The warranty promises a free repair for any defect occurring within two years. After 18 months the machine fails. The retailer offers to repair it for a service charge of ₦15,000, claiming the warranty does not cover the cost. Under the Consumer Protection Act, the retailer must bear all repair costs for warranty defects and is liable to a penalty of $10\%$ of the purchase price if it fails to comply. Calculate the total amount the retailer should pay, including any penalty, and state whether the consumer is entitled to a refund if the retailer refuses to repair.

A. 30,000 Naira; yes, consumer entitled to a full refund of 120,000 Naira

B. 27,000 Naira; no, consumer not entitled to a refund

C. 15,000 Naira; no, consumer not entitled to a refund

Correct D. 27,000 Naira; yes, consumer entitled to a full refund of 120,000 Naira

Correct Answer: D

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Question 10 View Details

An exporter receives a payment of €5,000. The current exchange rate is ₦560 per €1. The bank deducts a commission of $1.5\%$ on the converted amount. How many Naira will the exporter receive after the commission is deducted?

A. 2842000

Correct B. 2758000

C. 2772000

D. 2800000

Correct Answer: B

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Question 11 View Details

An insurer calculates the motor‑vehicle premium as follows: the base premium is $0.4\%$ of the vehicle's market value. A loading of $15\%$ is added for drivers under 25 years old. After one year the driver turns 25, so the loading is removed, and a no‑claims discount of $5\%$ is then applied to the premium (after the loading has been removed). Finally, a government tax of $2\%$ is added to the discounted premium. If the vehicle's market value is $\text{₦}1{,}200{,}000$, what is the final annual premium payable after the driver turns 25? Give your answer in naira to two decimal places.

A. ₦5,348.88

Correct B. ₦4,651.20

C. ₦4,560.00

D. ₦4,896.00

Correct Answer: B

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Question 12 View Details

A warehouse has a total usable volume of $3{,}000$ m³. Three product types are stored:\n\n- Product A occupies $0.5$ m³ per unit and yields a net profit of $\text{₦}95$ per unit after storage cost.\n- Product B occupies $0.8$ m³ per unit and yields a net profit of $\text{₦}160$ per unit after storage cost.\n- Product C occupies $1.5$ m³ per unit and yields a net profit of $\text{₦}275$ per unit after storage cost.\n\nThe manager must store at least $200$ units of A and the number of units of B may not exceed twice the number of units of C. Determine the numbers of units of A, B and C that maximise total net profit, and state the maximum profit. (Assume units are whole numbers.)

A. A: 200 units, B: 1,870 units, C: 940 units; maximum profit = ₦576,700

Correct B. A: 200 units, B: 1,870 units, C: 935 units; maximum profit = ₦575,325

C. A: 200 units, B: 1,800 units, C: 900 units; maximum profit = ₦554,500

D. A: 250 units, B: 1,870 units, C: 935 units; maximum profit = ₦580,075

Correct Answer: B

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Question 13 View Details

A wholesaler purchases a batch of $500$ units from a manufacturer whose list price is $\text{₦}1{,}200{,}000$. The wholesaler receives a trade discount of $12\%$ on the list price and, if payment is made within $10$ days, an additional cash discount of $3\%$ on the discounted price. The wholesaler then applies a markup of $25\%$ on his cost price and offers retailers a bulk‑purchase discount of $5\%$ on the marked‑up price when they buy at least $300$ units. Calculate the selling price per unit for a retailer buying $350$ units, and compute the wholesaler's profit margin (percentage profit on cost) for that transaction. Give the selling price to two decimal places and the profit margin as a percentage to two decimal places.

A. Selling price per unit = ₦2,350.00; profit margin = 17.50%

B. Selling price per unit = ₦2,500.00; profit margin = 20.00%

Correct C. Selling price per unit = ₦2,432.76; profit margin = 18.75%

D. Selling price per unit = ₦2,432.76; profit margin = 20.00%

Correct Answer: C

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Question 14 View Details

A consumer buys a washing machine for $\text{₦}150{,}000$ with a 2‑year warranty. The warranty contains the clause: "The consumer shall bear all costs of parts and labour for any repair, except where the defect is proven to be due to a manufacturing fault, in which case the supplier will cover 50 % of the repair cost." The machine develops a fault that requires a repair costing $\text{₦}20{,}000$. Under the Consumer Protection Act, a term is unfair if it creates a significant imbalance to the detriment of the consumer.\n\n(a) State whether the above clause is likely to be deemed unfair.\n(b) If the clause is unfair, the Act requires the supplier to reimburse the full repair cost and to pay a penalty equal to $20\%$ of the purchase price. Calculate the total compensation the consumer could claim.

A. Clause is unfair; total compensation = ₦45,000

B. Clause is fair; total compensation = ₦0

C. Clause is unfair; total compensation = ₦30,000

Correct D. Clause is unfair; total compensation = ₦50,000

Correct Answer: D

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Question 15 View Details

A company runs a sales campaign contacting $10{,}000$ potential customers using three channels:\n\n- Direct mail: $60\%$ of contacts, response rate $2\%$, profit per successful sale $\text{₦}8{,}000$.\n- Online advertising: $30\%$ of contacts, response rate $5\%$, profit per successful sale $\text{₦}6{,}000$.\n- Telemarketing: $10\%$ of contacts, response rate $8\%$, profit per successful sale $\text{₦}10{,}000$.\n\nAssuming the response rates and profit per sale are constant, calculate the expected total profit from the campaign.

A. ₦12,600,000

B. ₦2,720,000

Correct C. ₦2,660,000

D. ₦3,560,000

Correct Answer: C

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Question 16 View Details

A supplier lists a unit price of $\text{₦}120{,}000$. The buyer negotiates a discount structure: less than 50 units - $5\%$ discount; 50-99 units - $7\%$ discount; 100 units or more - $10\%$ discount. A further cash‑payment discount of $2\%$ on the discounted total is offered for payment within 10 days. VAT of $7.5\%$ is applied after all discounts. (i) The buyer orders $84$ units and pays within 10 days. Calculate the total amount payable. (ii) If the buyer instead orders $120$ units but pays after 30 days (no cash discount), calculate the total amount payable.

A. ₦9,942,912.00 for 84 units; ₦14,040,000.00 for 120 units

B. ₦10,077,480.00 for 84 units; ₦13,932,000.00 for 120 units

C. ₦10,088,316.00 for 84 units; ₦14,706,000.00 for 120 units

Correct D. ₦9,875,930.40 for 84 units; ₦13,932,000.00 for 120 units

Correct Answer: D

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Question 17 View Details

A company's current capital structure is 40% equity (cost $12\%$), 30% retained earnings (cost $9\%$) and 30% long‑term loan (cost $8\%$). The total capital is $\text{₦}50{,}000{,}000$. The firm plans to raise an additional $\text{₦}5{,}000{,}000$ by issuing new debentures at $10\%$ interest, which will replace an equal amount of the existing long‑term loan. After this change, what is the new weighted average cost of capital (WACC)?

A. 10.5\%

B. 9.8\%

Correct C. 10.1\%

D. 11.2\%

Correct Answer: C

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Question 18 View Details

A company must ship 10 tonnes of goods from Lagos to Kano. Two routes are available:\n\nRoute A: direct distance 900 km, fuel cost $\text{₦}150$ per km, driver allowance $\text{₦}20{,}000$ per day, journey time 2 days.\nRoute B: via Abuja, total distance 1,100 km, fuel cost $\text{₦}130$ per km, driver allowance $\text{₦}18{,}000$ per day, journey time 3 days.\nLoading and unloading at each end cost $\text{₦}5{,}000$ each. Calculate the total cost per tonne for each route and state which route is cheaper.

A. Route A is cheaper; cost per tonne = $\text{₦}20,300$

Correct B. Route A is cheaper; cost per tonne = $\text{₦}18{,}500$

C. Both routes have the same cost per tonne = $\text{₦}19,000$

D. Route B is cheaper; cost per tonne = $\text{₦}19,200$

Correct Answer: B

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Question 19 View Details

An exporter sells goods worth €200,000. The spot exchange rate is $\text{₦}560$ per €. A bank offers a 90‑day forward contract at $\text{₦}570$ per € but charges a commission of $0.5\%$ on the euro amount. Compare the net naira amount the exporter would receive (i) if the payment is taken now at the spot rate, and (ii) if the forward contract is used. Which option yields a higher naira receipt?

A. Spot: $\text{₦}112,000,000$; Forward: $\text{₦}111,500,000$; spot rate yields more.

Correct B. Spot: $\text{₦}112,000,000$; Forward: $\text{₦}113,430,000$; forward contract yields more.

C. Spot: $\text{₦}112,000,000$; Forward: $\text{₦}113,430,000$; spot rate yields more.

D. Spot: $\text{₦}113,000,000$; Forward: $\text{₦}113,430,000$; forward contract yields more.

Correct Answer: B

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Question 20 View Details

Three partners A, B and C start a partnership with capital contributions of $\text{₦}120{,}000$, $\text{₦}80{,}000$ and $\text{₦}100{,}000$ respectively. The partnership agreement states that profit is shared in proportion to capital after first paying interest on capital at $5\%$ per annum on each partner's capital. At the end of the year the partnership makes a net profit of $\text{₦}96{,}000$ before interest. Calculate the amount of profit each partner receives after the interest on capital has been paid.

Correct A. A: $\text{₦}32,400$; B: $\text{₦}21,600$; C: $\text{₦}27,000$

B. A: $\text{₦}32,800$; B: $\text{₦}21,867$; C: $\text{₦}27,333$

C. A: $\text{₦}44,400$; B: $\text{₦}29,600$; C: $\text{₦}37,000$

D. A: $\text{₦}38,400$; B: $\text{₦}25,600$; C: $\text{₦}32,000$

Correct Answer: A

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Question 21 View Details

A motor insurance policy has a basic premium of ₦120,000. The insurer adds a loading of $12\%$ for a high‑risk area, then applies a government tax of $5\%$ on the loaded premium. After issuing the policy, the insurer offers an early‑payment discount of $8\%$ on the final premium. During the year a claim of ₦45,000 is paid. What is the insurer's net profit from this policy (in naira)?

A. 96,120

Correct B. 84,830.4

C. 85,272

D. 78,648

Correct Answer: B

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Question 22 View Details

A company runs an advertising campaign using three media: TV, radio and internet. TV reaches $40\%$ of the target market, radio reaches $30\%$ and internet reaches $25\%$. Surveys show that $12\%$ of the market is reached by both TV and radio, $8\%$ by both TV and internet, and $5\%$ by both radio and internet. Moreover, $3\%$ are reached by all three media. What percentage of the target market is reached by at least one of the three media, and what percentage is not reached by any of them?

A. 78%, 22%

B. 98%, 2%

C. 70%, 30%

Correct D. 73%, 27%

Correct Answer: D

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Question 23 View Details

An insurer offers a health insurance policy with a sum assured of $\text{₦}200{,}000$. Historical data indicate that the probability of a claim in a year is $0.04$ and that the average claim amount when a claim occurs is $\text{₦}150{,}000$. The insurer wants to set a premium that covers the expected loss plus a loading of $20\%$ for administrative expenses and profit. After calculating this premium, a government levy of $5\%$ is applied and a $10\%$ early‑payment discount is offered. What is the final annual premium payable (rounded to the nearest naira)?

A. 7560

B. 6480

C. 6840

Correct D. 6804

Correct Answer: D

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Question 24 View Details

A retailer purchases a batch of 120 units of a product for a total cost of $\text{₦}84{,}000$. He intends to apply a markup of $35\%$ on the cost price to set the selling price per unit. To stimulate sales, he offers a seasonal discount of $12\%$ on the marked price for the first 80 units sold, while the remaining 40 units are sold at the full marked price. What is the retailer's total profit from the batch (in naira)?

A. 15792

Correct B. 20328

C. 24864

D. 29400

Correct Answer: B

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Question 25 View Details

State the three primary objectives of commerce as introduced in an introductory commerce course.

A. Facilitate trade, regulate prices, ensure consumer safety

B. Generate revenue, control supply, influence government policy

C. Maximize profits, expand market reach, reduce operational costs

Correct D. Satisfy human wants, create wealth, promote economic development

Correct Answer: D

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