Neco 2018 Commerce Question 15
Practice objective / multiple choice question 15 from the 2018 Neco Commerce examination.
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.
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About This Question
This is Neco 2018 Commerce Question 15. It is one of the objective questions from the 2018 Neco Commerce examination.
Difficulty level: Medium .
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