Neco 2018 Commerce Question 4

Practice essay / theory question 4 from the 2018 Neco Commerce examination. This question covers Foreign Trade .

Neco 2018 Commerce Essay / Theory
Topic: Foreign Trade
Question 4 NECO • 2018 • COMMERCE • essay

A Nigerian cocoa exporter ships 10 tonnes of cocoa to an overseas buyer under CIF terms. The buyer pays a FOB invoice of US$12,000. The exporter bears freight costs of US$800 and insurance costs of US$200. Export duty is charged at 5 % of the CIF value. At the time of shipment the exchange rate is 1 USD = ₦460. After the shipment the naira depreciates to 1 USD = ₦500. Using the above information, determine:

Question Parts

( a )
The total CIF value of the shipment in US dollars.
( b )
The export duty payable in naira (using the original exchange rate).
( c )
The net foreign‑exchange earnings of the exporter in naira after deducting freight, insurance and export duty, using the original exchange rate.
( d )
If the exporter converts the net earnings after the naira has depreciated to ₦500 per US$1, calculate the difference in naira compared with the original conversion and comment on the impact of the exchange‑rate change on the exporter’s earnings.

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About This Question

This is Neco 2018 Commerce Question 4. It is one of the essay questions from the 2018 Neco Commerce examination.

The question covers Foreign Trade .

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