Practice neco commerce 2018 Past Questions | Edcrib

Question 1 View Details

An exporter in Nigeria has a cost of goods amounting to ₦2,500,000. He wishes to earn a profit of \(20\%\) on this cost. The prevailing exchange rate is \(1\text{ USD}=₦460\). The bank handling the transaction charges a commission of \(1.5\%\) of the USD proceeds plus a fixed fee of ₦5,000. An export duty of \(5\%\) is levied on the FOB value (in Naira). What is the minimum FOB price in US dollars that the exporter must quote to achieve his target profit?

A. 6,800.00 USD

Correct B. 6,986.75 USD

C. 6,500.50 USD

D. 7,150.25 USD

Correct Answer: B

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Question 2 View Details

Three partners A, B and C invest capital of ₦120,000, ₦180,000 and ₦200,000 respectively in a business. They agree that each partner will receive a fixed salary allowance of ₦12,000, ₦15,000 and ₦18,000 per year respectively, and the remaining profit will be shared in proportion to their capital contributions. If the total profit before salaries is ₦150,000, determine the total earnings of each partner for the year.

A. A: ₦47,000; B: ₦50,000; C: ₦53,000

Correct B. A: ₦37,200; B: ₦52,800; C: ₦60,000

C. A: ₦48,000; B: ₦69,000; C: ₦78,000

D. A: ₦45,120; B: ₦64,680; C: ₦73,200

Correct Answer: B

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Question 3 View Details

A borrower obtains a loan of ₦500,000. The bank applies a discount of \(2\%\) on the loan amount and also deducts a processing fee of ₦5,000 upfront. The loan is to be repaid in equal monthly installments over 12 months, with interest charged on the reducing balance at a nominal annual rate \(i\) (compounded monthly). At the end of the year the borrower has paid a total of ₦560,000. Calculate the nominal annual interest rate \(i\) (to the nearest 0.1\%).

A. 30.2%

Correct B. 27.4%

C. 22.8%

D. 25.6%

Correct Answer: B

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Question 4 View Details

A firm finances a new project costing ₦10,000,000 using three sources: 40\% equity (retained earnings) with a required return of 15\%; 30\% debentures bearing 10\% interest; and 30\% bank loan at 12\% interest. The corporate tax rate is 30\%. Determine the weighted average cost of capital (WACC) for the project (expressed as a percentage to two decimal places).

A. 12.30%

B. 9.87%

Correct C. 10.62%

D. 11.45%

Correct Answer: C

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Question 5 View Details

A retailer purchases an item for ₦8,000. He applies a markup of 25\% on cost and then offers a discount of 10\% on the marked‑up price to customers. What is the final selling price after the discount (in Naira)?

A. ₦9,200

Correct B. ₦9,000

C. ₦8,640

D. ₦8,500

Correct Answer: B

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Question 6 View Details

A transport company charges a base rate of \(150\) N per kilometre and adds a fuel surcharge equal to \(0.2\) litres per kilometre multiplied by the fuel price \(P\) (N per litre). For a 120 km trip the total charge was \(20\,400\) N, and for a 200 km trip (which qualifies for a 5\% discount on the base‑rate portion only) the total charge was \(33\,500\) N. Find the fuel price \(P\) and then compute the total charge for a 300 km trip.

Correct A. 48,750

B. 49,500

C. 48,000

D. 47,250

Correct Answer: A

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Question 7 View Details

A trader buys a batch of goods for \(12\,000\) N. He marks up the cost by 25\% to obtain the marked price, then offers a 10\% discount to customers. Determine the selling price and the profit percentage earned by the trader.

A. Selling price = 13,200 N; Profit = 10\%

Correct B. Selling price = 13,500 N; Profit = 12.5\%

C. Selling price = 12,600 N; Profit = 5\%

D. Selling price = 15,000 N; Profit = 25\%

Correct Answer: B

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Question 8 View Details

Three partners A, B and C run a business. Their capital contributions are \(40\,000\) N, \(60\,000\) N and \(50\,000\) N respectively. In addition they each work a number of hours: A works 120 h, B works 80 h and C works 100 h. Profits are shared in proportion to a weighted sum where capital is weighted twice as heavily as labour (i.e., contribution = \(2\times\text{capital} + 1\times\text{hours}\)). If the total profit to be distributed is \(180\,000\) N, how much does each partner receive?

Correct A. A: 48,024 N; B: 71,976 N; C: 60,000 N

B. A: 48,072 N; B: 72,048 N; C: 60,060 N

C. A: 48,108 N; B: 71,891 N; C: 60,040 N

D. A: 48,000 N; B: 72,000 N; C: 60,000 N

Correct Answer: A

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Question 9 View Details

A manufacturing firm prepares the following cash‑flow data for the year:\n- Opening cash balance: \(150\,000\) N\n- Cash sales: \(500\,000\) N\n- Credit sales: \(300\,000\) N, of which 60\% is collected in the same year\n- Purchases on credit: \(350\,000\) N, of which 70\% is paid in cash during the year\n- Operating expenses (cash): \(120\,000\) N\n- Depreciation (non‑cash): \(40\,000\) N\n- Interest expense (cash): \(15\,000\) N\n- Tax rate: 30\% on profit before tax (profit before tax includes depreciation)\nUsing this information, determine the closing cash balance at the end of the year.

Correct A. 399,000

B. 385,000

C. 420,000

D. 367,500

Correct Answer: A

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Question 10 View Details

A wholesaler purchases goods at a list price \(L\). He receives a trade discount of 12\% on \(L\) and then pays a commission of 5\% on the net purchase price (after discount). He marks up the total cost (net purchase price plus commission) by 30\% to set the selling price. If the final selling price is \(22\,000\) N, determine the original list price \(L\).

Correct A. 18,315

B. 18,900

C. 19,500

D. 17,800

Correct Answer: A

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Question 11 View Details

A retailer needs ₦500,000 cash to purchase inventory. He can either (a) obtain a bank loan that carries (12\%\) per annum simple interest payable at the end of 6 months and a processing fee equal to (2\%\) of the loan amount, or (b) issue a debenture that carries (10\%\) per annum payable semi‑annually and has an issuance cost of ₦5,000. Assuming the loan amount must be sufficient to cover both the purchase price and the processing fee, which financing option results in the lower total cost after 6 months? State the cheaper option.

Correct A. debenture

B. bank loan

C. cash purchase

D. equity financing

Correct Answer: A

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Question 12 View Details

A company is choosing an advertising strategy for a new product. Option A: a TV advertisement lasting 4 weeks costs ₦1,200,000 and is expected to reach 2,500,000 viewers with a purchase conversion rate of \(1.2\%\). Option B: a radio advertisement lasting 8 weeks costs ₦720,000 and is expected to reach 1,800,000 listeners with a conversion rate of \(1.8\%\). The company may also add a flyer distribution costing ₦150,000, which is expected to increase the conversion rate of the chosen medium by \(0.3\) percentage points. Each unit sold yields a profit of ₦250. Which advertising strategy (including the decision on whether to use the flyer) gives the highest expected profit? State the chosen option.

A. Radio ad without flyer

Correct B. Radio ad with flyer

C. TV ad with flyer

D. TV ad without flyer

Correct Answer: B

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Question 13 View Details

A wholesaler must transport 3,200 kg of goods from Lagos to Abuja. Company X charges a fixed loading fee of ₦15,000, a rate of ₦120 per kg for the first 2,000 kg and ₦100 per kg for any weight above 2,000 kg. Company Y charges no fixed fee but rates of ₦200 per kg for the first 1,500 kg, ₦180 per kg for the next 1,000 kg and ₦150 per kg for any remaining weight. Which company offers the lower total transportation cost? State the cheaper company.

Correct A. Company X

B. Company Y

C. Both companies have equal cost

D. Company Z

Correct Answer: A

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Question 14 View Details

A firm runs two communication campaigns: a social‑media campaign reaching 120,000 people and radio spots reaching 80,000 people. Market research shows that \(25\%\) of the radio audience also follows the firm's social‑media pages. How many distinct individuals are reached by the combined campaigns? Give your answer as a number of people.

A. 170000

B. 220000

C. 200000

Correct D. 180000

Correct Answer: D

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Question 15 View Details

An insurance company offers a fire‑insurance policy for a small shop. The probability of a fire in a year is \(0.004\) and the average loss, if a fire occurs, is ₦2,500,000. The company adds a loading of \(15\%\) for administrative expenses and profit to the expected loss to set the premium. If the shop installs a fire alarm, the probability of fire falls to \(0.0015\) and the company gives a discount of \(5\%\) on the premium. What is the premium before the discount, and what is the discounted premium after installing the fire alarm? Give both amounts in naira.

Correct A. 11500; 10925

B. 11500; 10825

C. 11200; 10640

D. 12000; 11400

Correct Answer: A

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Question 16 View Details

A trader buys goods for ₦5,000 and sells them at a profit of \\(20\\%\\) of the cost price. What is the selling price?

A. 5000

B. 6200

C. 5500

Correct D. 6000

Correct Answer: D

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Question 17 View Details

A retailer has fixed costs of \\(2,000\\) naira per month and a variable cost of \\(50\\) naira per unit. Each unit sells for \\(150\\) naira. How many units must be sold each month to break even?

A. 25

B. 10

Correct C. 20

D. 30

Correct Answer: C

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Question 18 View Details

A retailer purchases 200 units of an item at a cost of \\(500\\) naira each. He marks each unit at \\(800\\) naira and offers a first discount of \\(12\\%\\) on the total marked price, followed by a further discount of \\(5\\%\\) on the amount after the first discount. The buyer pays cash and receives an early‑payment discount of \\(1\\%\\) on the amount after the second discount. The retailer also pays a sales commission of \\(2\\%\\) on the final amount received. What is the retailer's net profit from this transaction?

Correct A. 29774

B. 32422

C. 31085

D. 29222

Correct Answer: A

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Question 19 View Details

A consumer bought a washing machine with an original price of \\(250,000\\) naira. Under the warranty, the retailer will replace the machine after 30 days of failure, offering a discount of \(D\%\) on the original price. If the replacement is delayed exactly 30 days, the consumer is entitled to a compensation of \(15\%\) of the original price plus a statutory penalty of \(5,000\) naira. What is the minimum discount percentage \(D\) the consumer should demand so that his total outlay does not exceed the original price?

A. 18

B. 15

Correct C. 17

D. 20

Correct Answer: C

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Question 20 View Details

Three partners A, B and C start a partnership with capital contributions of \\(120,000\\) naira, \\(80,000\\) naira and \\(100,000\\) naira respectively. They agree that profit will be shared in proportion to capital contributions, but each partner also receives a monthly interest of \\(1\\%\\) on his capital for the use of his funds. After 6 months, partner B withdraws \\(30,000\\) naira from his capital, reducing his capital for the remaining 6 months. The partnership earns a total net profit of \\(96,000\\) naira for the year. Determine the amount of profit allocated to partner C after accounting for the interest allowances.

A. 29800

B. 34000

C. 31200

Correct D. 32600

Correct Answer: D

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Question 21 View Details

A customer obtains a loan of ₦500,000 from a bank. The bank deducts a processing fee equal to \\(2\\%\\) of the loan amount before disbursing the funds, and also charges a fixed monthly service fee of ₦2,000. The loan carries a nominal annual interest rate of \\(12\\%\\) compounded monthly and is to be repaid in equal monthly installments over \\(3\\) years. What is the amount of each monthly installment (including the service fee), rounded to the nearest naira?

A. 17920

B. 19150

C. 16500

Correct D. 18610

Correct Answer: D

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Question 22 View Details

A wholesaler issues an invoice for 150 units at a unit price of ₦8,500. The invoice includes a trade discount of \\(12\\%\\) on the total, a cash discount of \\(3\\%\\) on the balance if paid within 10 days, and VAT of \\(7.5\\%\\) applied after discounts. If payment is delayed beyond 30 days, a surcharge of \\(2\\%\\) is added to the amount after VAT. Compute (a) the amount payable if the invoice is settled within 10 days, (b) the amount payable if settled after 30 days, and (c) the percentage increase from the early payment amount to the late payment amount. Give answers rounded to the nearest naira and percentage to two decimal places.

A. Early: 1169966; Late: 1224551; Increase: 4.67%

B. Early: 1167517; Late: 1230273; Increase: 5.38%

Correct C. Early: 1169966; Late: 1230273; Increase: 5.16%

D. Early: 1088340; Late: 1230273; Increase: 13.04%

Correct Answer: C

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Question 23 View Details

An investor buys 200 shares of XYZ at \\(₦1,200\\) each, paying a brokerage commission of \\(0.5\\%\\) of the transaction value. Two months later he buys another 300 shares at \\(₦1,350\\) each, with the same commission rate. Before selling, the company announces a 2‑for‑1 stock split, doubling the number of shares held and halving the cost per share. The investor then sells 400 shares at \\(₦1,500\\) each, paying a commission of \\(0.5\\%\\) on the sale and a capital gains tax of \\(10\\%\\) on the profit. Determine (a) the average cost per share after the split, (b) the net proceeds from the sale after commissions and tax, and (c) the overall profit or loss on the whole transaction. Give monetary values rounded to the nearest naira.

Correct A. Average cost: 648.23; Net proceeds: 562929; Overall loss: 85296

B. Average cost: 650.00; Net proceeds: 560000; Overall loss: 88225

C. Average cost: 645.50; Net proceeds: 563500; Overall loss: 84725

D. Average cost: 648.23; Net proceeds: 560500; Overall loss: 87725

Correct Answer: A

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Question 24 View Details

A company needs ₦10,000,000 for expansion. Option A: a 5‑year bank loan at an annual interest rate of \\(9\\%\\) payable annually, with a loan arrangement fee of \\(1\\%\\) of the loan amount and a processing fee of ₦150,000. Option B: issue 10‑year debentures with a nominal coupon rate of \\(8\\%\\) payable annually, incurring underwriting costs of \\(2\\%\\) of the issue amount and a registration fee of ₦200,000. Assuming the principal is repaid at maturity, compute the effective annual cost (total interest plus all fees spread over the term) for each option and state which option is cheaper. Express the effective annual cost as a percentage to one decimal place.

A. Option A: 9.5%; Option B: 8.4%; Cheaper option: Option A

Correct B. Option A: 9.5%; Option B: 8.4%; Cheaper option: Option B

C. Option A: 9.5%; Option B: 9.0%; Cheaper option: Option A

D. Option A: 10.2%; Option B: 8.4%; Cheaper option: Option B

Correct Answer: B

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Question 25 View Details

A wholesaler purchases a product at a unit price of \\(₦4,200\\). He receives a bulk trade discount of \\(5\\%\\) on the purchase price and incurs a handling cost of ₦150 per unit. He intends to apply a markup of \\(30\\%\\) on his total cost (after discount and handling) to set the selling price per unit. His monthly fixed overhead is ₦120,000. Determine (a) the selling price per unit, and (b) the minimum number of units that must be sold each month to cover both variable and fixed costs (break‑even quantity). Round the selling price to the nearest naira and the break‑even quantity to the next whole unit.

A. Selling price: 5187; Break‑even quantity: 101

B. Selling price: 5382; Break‑even quantity: 96

C. Selling price: 5928; Break‑even quantity: 88

Correct D. Selling price: 5382; Break‑even quantity: 97

Correct Answer: D

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