Neco 2025 Commerce Question 27

Practice objective / multiple choice question 27 from the 2025 Neco Commerce examination.

Neco 2025 Commerce Objective / Multiple Choice Medium Difficulty
Question 27 NECO • 2025 • COMMERCE • objective

A small manufacturing firm needs \(40,000,000\) naira for expansion. It can raise funds through a bank loan (interest \(12\%\) per annum, maximum \(40\%\) of total), issuing 10% debentures (interest \(10\%\) per annum, unlimited), and retained earnings (no cost). The firm wants the total annual interest cost not to exceed \(3,500,000\) naira. Determine the maximum amount that can be raised via the bank loan and the minimum amount that must be raised from retained earnings.

Answer Options

A. Maximum bank loan: 14000000; Minimum retained earnings: 10000000
B. Maximum bank loan: 16000000; Minimum retained earnings: 9000000
Correct Answer C. Maximum bank loan: 16000000; Minimum retained earnings: 8200000
D. Maximum bank loan: 15000000; Minimum retained earnings: 9000000
Correct Answer
C
Correct Option:
Maximum bank loan: 16000000; Minimum retained earnings: 8200000

About This Question

This is Neco 2025 Commerce Question 27. It is one of the objective questions from the 2025 Neco Commerce examination.

Difficulty level: Medium .

View More Neco 2025 Commerce Questions More Neco Practice Questions Back to Questions

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support