Neco 2025 Government Question 49

A public agency plans a three‑year capital project. Year 1 expenditure is \(\text{₦}200\) million. Year 2 is projected to increase by 8% over Year 1, and Year 3 is projected to increase by 5% over Year 2. Annual inflation is expected to be 6%. The agency wants the total real (inflation‑adjusted) cost over the three years, expressed in Year 1 price terms, not to exceed \(\text{₦}600\) million.\n(a) Do the projected nominal expenditures satisfy the real‑cost constraint?\n(b) If they do not, determine the maximum permissible percentage increase for Year 2 (keeping the Year 3 increase at 5% over Year 2) that would meet the constraint. Give the answer to two decimal places.