Practice neco commerce 2017 Past Questions | Edcrib

Question 1 View Details

A trader purchases goods worth \$\\text{₦}150,000\$. The supplier offers a trade discount of \$10\\%\$ on the invoice amount. If the trader pays within 10 days, a cash discount of \$2\\%\$ is allowed on the balance. How much does the trader actually pay?

Correct A. 132300

B. 137700

C. 132000

D. 135000

Correct Answer: A

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Question 2 View Details

A company plans an SMS promotional campaign. The service provider charges a fixed setup fee of \$\\text{₦}50,000\$ plus \$\\text{₦}5\$ per message. The company intends to send messages to \$20,000\$ customers. The expected response rate is \$4\\%\$, and each response generates revenue of \$\\text{₦}250\$. (a) How many responses are required to break even? (b) Based on the expected response rate, what is the profit or loss?

Correct A. Break‑even: 600 responses; Profit: ₦50,000

B. Break‑even: 500 responses; Profit: ₦25,000

C. Break‑even: 600 responses; Profit: ₦0

D. Break‑even: 800 responses; Profit: ₦100,000

Correct Answer: A

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Question 3 View Details

A supplier quotes the following VAT‑inclusive prices: Item A \$\\text{₦}12,500\$, Item B \$\\text{₦}8,750\$, Item C \$\\text{₦}15,300\$. VAT is \$7.5\\%\$. A buyer orders 4 units of A, 6 units of B and 3 units of C and asks for a \$5\\%\$ trade discount on the total exclusive‑of‑VAT amount. Determine the amount payable after the discount and adding VAT.

A. 139850

Correct B. 141980

C. 144250

D. 138720

Correct Answer: B

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Question 4 View Details

A firm uses radio and newspaper advertising. The cost per thousand impressions (CPM) is \$\\text{₦}2,500\$ for radio and \$\\text{₦}3,200\$ for newspaper. With a total advertising budget of \$\\text{₦}560,000\$, the firm wants at least \$200,000\$ total impressions and at least \$30\\%\$ of the impressions must come from radio. What is the maximum number of newspaper impressions (in thousands) that can be purchased while satisfying all constraints?

A. 80000

B. 75000

C. 90000

Correct D. 85000

Correct Answer: D

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Question 5 View Details

An investor buys 200 shares of Company X at \$\\text{₦}1,250\$ per share, paying a brokerage commission of \$0.5\\%\$ of the transaction value. Later the investor sells 120 shares at \$\\text{₦}1,400\$ per share, paying the same commission rate and also a securities transaction tax (STT) of \$0.15\\%\$ on the sale value. The investor then receives a dividend of \$\\text{₦}50\$ per share on the remaining 80 shares held. Determine the overall profit or loss realised by the investor after all costs, commissions, taxes and dividend income.

Correct A. -80342

B. -79092

C. -84342

D. -80090

Correct Answer: A

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Question 6 View Details

A country imports $200{,}000$ tonnes of wheat at $\$2$ per tonne. The government imposes a $15\%$ tariff on wheat imports. The price elasticity of demand for wheat imports is $-0.4$. Assuming the tariff is fully passed to consumers, calculate (i) the percentage change in quantity imported, (ii) the new quantity imported, and (iii) the change in the trade balance in dollars, given that exports are $\$150{,}000$.

A. -30000

B. -3240

C. -34200

Correct D. -32400

Correct Answer: D

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Question 7 View Details

A firm plans to advertise using TV and radio. TV ads cost $\text{₦}150$ per 1,000 viewers (CPM) and each TV ad reaches $2{,}000{,}000$ viewers. Radio ads cost $\text{₦}90$ per 1,000 listeners and each radio ad reaches $800{,}000$ listeners. The firm needs a total reach of at least $10{,}000{,}000$ people. The advertising elasticity of demand is $0.25$ (a 1\% increase in advertising expenditure raises sales by $0.25\%$). Current monthly sales are $\text{₦}4{,}500{,}000$ with a profit margin of $20\%$. Determine the optimal whole numbers of TV and radio ads that meet the reach requirement at minimum cost, and then compute the expected increase in profit (in ₦) from the advertising campaign.

A. 50000

B. 48000

C. 45200

Correct D. 46800

Correct Answer: D

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Question 8 View Details

A trucking company transports wheat over $350$ km. The truck's capacity is $20$ tonnes. Fixed cost per trip (driver salary, depreciation) is $\text{₦}50{,}000$. Variable cost is $\text{₦}20$ per km. The company charges $\text{₦}4{,}000$ per tonne delivered. Determine the minimum load factor (as a percentage of full capacity) the truck must carry to break even on a trip.

A. 68.00

B. 80.00

C. 73.50

Correct D. 71.25

Correct Answer: D

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Question 9 View Details

A firm finances a new project costing $\text{₦}10{,}000{,}000$ with 40\% equity, 30\% long‑term debt at 12\% interest, and 30\% retained earnings. The cost of new equity is 15\% and the cost of retained earnings is 13\%. The corporate tax rate is 35\%. (i) Compute the weighted average cost of capital (WACC) for the project. (ii) If the project will generate an annual cash flow of $\text{₦}2{,}200{,}000$ indefinitely, determine whether the project's net present value (NPV) is positive, discounting the cash flows at the WACC.

Correct A. WACC = 12.24%; NPV ≈ ₦7,973,856 (positive)

B. WACC = 11.80%; NPV ≈ ₦-500,000 (negative)

C. WACC = 12.24%; NPV ≈ ₦5,400,000 (positive)

D. WACC = 13.10%; NPV ≈ ₦6,200,000 (positive)

Correct Answer: A

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Question 10 View Details

An importer purchases electronics worth €150,000 and machinery worth £200,000. The current exchange rates are €1 = $\text{₦}560$ and £1 = $\text{₦}720$. The importer expects the euro to depreciate by 4\% against the naira and the pound to appreciate by 3\% against the naira before payment. Calculate the total amount in naira the importer will have to pay after the exchange‑rate changes.

A. 228000000

B. 235680000

C. 220320000

Correct D. 228960000

Correct Answer: D

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Question 11 View Details

A consumer purchases a television with a marked price of $\N120,000$. The seller offers a $10\%$ discount on the marked price and then adds a sales tax of $5\%$ on the discounted price. After purchase the TV is found to be defective. Under the Consumer Protection Act the consumer may claim a refund equal to the amount actually paid plus a statutory penalty of $15\%$ of the purchase price (before tax). The seller, however, offers to repair the TV for a fixed cost of $\N8,000$. Determine (i) the total cash amount the consumer would receive if he claims a refund, (ii) the total cash outflow if he accepts the repair, and (iii) which option gives the greater monetary benefit.

A. Refund amount = \\N129,600; Repair net outflow = \\N120,000; Optimal choice: accept repair

Correct B. Refund amount = \N129,600; Repair net outflow = \N121,400; Optimal choice: claim refund

C. Refund amount = \\N128,000; Repair net outflow = \\N122,000; Optimal choice: claim refund

D. Refund amount = \\N130,000; Repair net outflow = \\N121,400; Optimal choice: claim refund

Correct Answer: B

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Question 12 View Details

A consumer buys a laptop on credit for $\N200,000$. He pays a 20\% down‑payment and the balance is to be paid in four equal monthly instalments. After two months he discovers a mis‑representation and exercises his cooling‑off right, demanding a full refund. The seller agrees to refund the instalments already paid, plus interest at 2\% per month on the remaining balance for the two months the laptop was in his possession, and adds a statutory penalty of 10\% of the total contract price. Determine the total amount the consumer will receive as refund.

Correct A. \N143,200

B. \N140,000

C. \N123,200

D. \N146,400

Correct Answer: A

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Question 13 View Details

A retailer faces an annual demand of 12,000 units for a product. The ordering cost is $\N5,000$ per order and the holding cost is 20\% of the unit cost per year. The supplier offers the following price breaks: up to 1,000 units per order - unit cost $\N150$; 1,001 to 3,000 units - unit cost $\N140$; more than 3,000 units - unit cost $\N130$. Determine the order quantity that minimises the total annual cost (purchase + ordering + holding) and state the minimum total cost.

Correct A. Optimal order quantity = 3,001 units; Minimum total cost = \N1,619,006

B. Optimal order quantity = 1,000 units; Minimum total cost = \N1,700,000

C. Optimal order quantity = 2,500 units; Minimum total cost = \N1,650,000

D. Optimal order quantity = 3,500 units; Minimum total cost = \N1,610,000

Correct Answer: A

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Question 14 View Details

A company runs two advertising campaigns, each with a total budget of $\N2,500,000$. Campaign A uses 10 TV spots costing $\N150,000$ each (each spot reaches 0.8 million viewers) and 20 newspaper ads costing $\N50,000$ each (each ad reaches 0.2 million readers). Campaign B uses 50 radio ads costing $\N30,000$ each (each ad reaches 0.5 million listeners) and 100 online banner ads costing $\N10,000$ each (each banner reaches 0.1 million viewers). The cost per thousand impressions (CPM) is calculated as $\text{Cost}\,/\,(\text{Total reach in thousands})$. Compute the average CPM for each campaign (to two decimal places) and state which campaign is more cost‑effective.

A. CPM_A = \\N208.33 per thousand; CPM_B = \\N85.00 per thousand; More cost‑effective: Campaign B

B. CPM_A = \\N208.33 per thousand; CPM_B = \\N71.43 per thousand; More cost‑effective: Campaign A

C. CPM_A = \\N250.00 per thousand; CPM_B = \\N71.43 per thousand; More cost‑effective: Campaign A

Correct D. CPM_A = \N208.33 per thousand; CPM_B = \N71.43 per thousand; More cost‑effective: Campaign B

Correct Answer: D

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Question 15 View Details

A retailer must transport 5,000 kg of goods from Lagos to Kano. Two alternatives are available.\n\nRoute 1: Lagos \u2192 Ilorin (300 km) by road at $\N0.45$ per kg per km, then Ilorin \u2192 Kano (800 km) by rail at $\N0.30$ per kg per km. A handling surcharge of \N5,000 is incurred at Ilorin.\n\nRoute 2: Direct road Lagos \u2192 Kano (1,200 km) at $\N0.40$ per kg per km, with a fuel surcharge of 12\% on the freight cost.\n\nCalculate the total cost of each route (to the nearest naira) and indicate which route is cheaper.

A. Route 1 costs \N1,880,000; Route 2 costs \N2,688,000; Cheaper route: Route 2

B. Route 1 costs \N1,875,000; Route 2 costs \N2,688,000; Cheaper route: Route 1

Correct C. Route 1 costs \N1,880,000; Route 2 costs \N2,688,000; Cheaper route: Route 1

D. Route 1 costs \N1,880,000; Route 2 costs \N2,640,000; Cheaper route: Route 1

Correct Answer: C

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Question 16 View Details

A home trader purchases a consignment of goods for ₦18,500 and sells the whole consignment at a profit of $12\%$. What is the amount of profit earned?

Correct A. 2220

B. 1850

C. 2400

D. 2000

Correct Answer: A

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Question 17 View Details

A transport company charges a fixed hire fee plus a variable charge per kilometre. For a $150$ km trip the total charge is $\text{₦}45,000$, and for a $250$ km trip the total charge is $\text{₦}65,000$. Determine the fixed hire fee and the charge per kilometre, and then calculate the total charge for a $180$ km trip.

A. 52500

Correct B. 51000

C. 45000

D. 60000

Correct Answer: B

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Question 18 View Details

An insurance company charges a premium equal to 5\% of the insured value plus a fixed administrative charge of $\text{₦}2,500$. If a particular policy costs $\text{₦}7,500$, what amount will the insurer pay if a loss amounting to 40\% of the insured value occurs?

A. 60000

B. 50000

C. 3000

Correct D. 40000

Correct Answer: D

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Question 19 View Details

A small retailer records monthly profits of $\text{₦}1,200$, $\text{₦}800$ and $\text{₦}1,500$ from three different products. What is the total profit for the month?

Correct A. 3500

B. 3400

C. 3600

D. 3000

Correct Answer: A

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Question 20 View Details

A firm needs $\text{₦}500,000$ for a 3‑year project. It can obtain the amount either by a bank loan at 12\% simple interest per annum or by issuing shares at $\text{₦}40$ each, paying an annual dividend of 8\% on the total share capital raised. Which source of finance will cost the firm less over the 3‑year period, and what is the difference in total cost between the two sources?

A. share issue, 50000

B. bank loan, 50000

C. bank loan, 60000

Correct D. share issue, 60000

Correct Answer: D

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Question 21 View Details

A motor insurance policy charges a base premium equal to $12\%$ of the insured value of the vehicle. The insurer adds a loading of $15\%$ of the base premium for administrative expenses, then applies a tax of $5\%$ on the sum of the base premium and the loading. An early‑payment discount of $2\%$ is offered on the total after tax. If the final premium paid by the policyholder is ₦45,600, determine the insured value of the vehicle (rounded to the nearest naira).

A. ₦332,000

Correct B. ₦321,122

C. ₦298,750

D. ₦310,500

Correct Answer: B

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Question 22 View Details

A warehouse stores a single product. Annual demand is 12,000 units. The ordering cost per order is ₦2,500. The holding cost is $25\%$ of the unit cost per year, and the unit cost is ₦800. The warehouse can hold at most 200 units at any time. Using the Economic Order Quantity (EOQ) model, determine the order quantity that minimises the total relevant cost while respecting the storage capacity, and compute the resulting annual total cost (including purchase cost).

A. 300 units; ₦9,730,000

B. 200 units; ₦9,770,000

Correct C. 400 units; ₦9,715,000

D. 500 units; ₦9,710,000

Correct Answer: C

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Question 23 View Details

A retailer purchases an item for ₦5,000 and marks it up by $30\%$ to obtain the marked price. He then offers a discount of $10\%$ on the marked price. What is the final selling price as a percentage of the original cost price?

A. 111\%

B. 130\%

Correct C. 117\%

D. 108\%

Correct Answer: C

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Question 24 View Details

An advertiser can purchase any integer number of TV spots and radio spots for a campaign. Each TV spot costs ₦150,000 and yields 20 GRPs. Each radio spot costs ₦45,000 and yields 8 GRPs. The target is to achieve at least 150 GRPs at minimum total cost. Determine the numbers of TV and radio spots that meet the target at the lowest possible cost, and state the total cost.

A. 8 TV spots, 0 radio spots; total cost ₦1,200,000

B. 1 TV spots, 17 radio spots; total cost ₦915,000

C. 5 TV spots, 7 radio spots; total cost ₦1,065,000

Correct D. 0 TV spots, 19 radio spots; total cost ₦855,000

Correct Answer: D

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Question 25 View Details

An insurance company offers a health policy with a base premium equal to $18\%$ of the sum insured. A loading of $12\%$ of the base premium is added for administrative expenses, and a tax of $5\%$ is applied on the sum of the base premium and the loading. An early‑payment discount of $3\%$ is given on the total after tax. A group of 25 employees each purchase a policy with a sum insured of ₦2,000,000. (a) Calculate the total amount the group pays annually. (b) If the insurer's cost per policy is $20\%$ of the sum insured and it wishes to earn a profit margin of $20\%$ on this cost, what discount (or surcharge) percentage should be applied, keeping all other rates unchanged, to achieve the target profit? Express the required adjustment as a percentage (a negative value indicates a surcharge).

A. Total paid: ₦10,200,000; required discount: -15.0\% (a 15.0\% surcharge)

Correct B. Total paid: ₦10,266,480; required discount: -13.4\% (a 13.4\% surcharge)

C. Total paid: ₦10,584,000; required discount: -13.4\% (a 13.4\% surcharge)

D. Total paid: ₦10,266,480; required discount: -10.0\% (a 10.0\% surcharge)

Correct Answer: B

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