Neco 2019 Commerce Question 49

Practice objective / multiple choice question 49 from the 2019 Neco Commerce examination.

Neco 2019 Commerce Objective / Multiple Choice Medium Difficulty
Question 49 NECO • 2019 • COMMERCE • objective

An individual borrows ₦1,000,000 at a nominal annual rate of 12 % compounded monthly. A processing fee of 2 % of the loan amount is deducted upfront. The loan is to be repaid in equal monthly instalments over 24 months. Calculate (i) the monthly instalment amount, and (ii) the effective annual interest rate (EAR) of the loan, taking the fee into account. Give the instalment to the nearest naira and the EAR to one decimal place.

Answer Options

A. Monthly instalment ₦45,200; EAR 12.0 %
B. Monthly instalment ₦44,800; EAR 11.8 %
C. Monthly instalment ₦47,500; EAR 13.2 %
Correct Answer D. Monthly instalment ₦46,118; EAR 12.4 %
Correct Answer
D
Correct Option:
Monthly instalment ₦46,118; EAR 12.4 %

About This Question

This is Neco 2019 Commerce Question 49. It is one of the objective questions from the 2019 Neco Commerce examination.

Difficulty level: Medium .

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