Neco 2024 Commerce Question 45

An advertising agency runs a TV campaign for a client. The cost of the ad spot is \(\text{₦}2,500,000\). The agency's management fee is 12 % of the spot cost plus a fixed overhead of \(\text{₦}150,000\). The campaign reaches 1.2 million viewers. Of these, 3 % are expected to visit the client's store, and 40 % of the visitors are expected to make a purchase with an average sale value of \(\text{₦}8,500\). The client's gross profit margin on each sale is 25 %. The client agrees to pay the agency a performance bonus equal to 5 % of the gross profit generated from the campaign, provided the gross profit exceeds \(\text{₦}1,000,000\). (a) Calculate the total amount the client must pay the agency (spot cost + management fee + bonus, if any). (b) Calculate the client's net profit from the campaign after paying the agency. Express both results in naira.