Neco 2022 Commerce Question 38

Practice objective / multiple choice question 38 from the 2022 Neco Commerce examination.

Neco 2022 Commerce Objective / Multiple Choice Hard Difficulty
Question 38 NECO • 2022 • COMMERCE • objective

A consumer purchases a washing machine advertised at ₦120,000. The store offers a 12\% cash discount, then a 5\% sales tax is added to the discounted price. The consumer also has a store‑credit voucher of ₦8,000 that can be applied after tax. The manufacturer's standard warranty lasts 2 years, but the store can sell an extended warranty for an additional ₦15,000, covering a total of 5 years. Repairs after the standard warranty cost ₦30,000 and occur with a probability of 10\% each year, independently. Should the consumer buy the extended warranty? Compute the expected total cost over 5 years with and without the extended warranty and state the decision.

Answer Options

Correct Answer A. No, because total expected cost without warranty (₦111,880) is lower than with warranty (₦117,880).
B. No, because total expected cost without warranty (₦112,300) is lower than with warranty (₦118,300).
C. Yes, because total expected cost without warranty (₦110,500) is higher than with warranty (₦115,500).
D. No, because total expected cost without warranty (₦109,900) is lower than with warranty (₦119,900).
Correct Answer
A
Correct Option:
No, because total expected cost without warranty (₦111,880) is lower than with warranty (₦117,880).

About This Question

This is Neco 2022 Commerce Question 38. It is one of the objective questions from the 2022 Neco Commerce examination.

Difficulty level: Hard .

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