Neco 2020 Commerce Question 49

An insurance company calculates motor‑vehicle premiums as follows: the base premium is 2% of the insured value of the vehicle; a loading of 25% of the base premium is added for administrative expenses; a government tax of 5% is applied on the sum of base premium and loading. Policy‑holders who had no claim in the previous year receive a 10% discount on the total premium after tax. A client wants to insure a car valued at \(\text{₦}3,500,000\) and wishes the final premium (after any discount) not to exceed \(\text{₦}120,000\). Determine whether the client qualifies for the discount and compute the final premium. If the premium would exceed the limit, state the maximum insured value the client could choose while still receiving the discount and keeping the premium within \(\text{₦}120,000\).