Neco Model Questions Vol1 2017 Commerce Question 40

Practice objective / multiple choice question 40 from the 2017 Neco Model Questions Vol1 Commerce examination.

Neco Model Questions Vol1 2017 Commerce Objective / Multiple Choice Medium Difficulty
Question 40 NECO_MODEL_QUESTIONS_VOL1 • 2017 • COMMERCE • objective

A borrower obtains a loan of \(\text{₦}500{,}000\) from a bank that applies a nominal annual discount rate of 12 % convertible quarterly. The loan is to be repaid in a single lump sum after one year. (i) What amount must the borrower repay at maturity? (ii) What is the effective annual interest rate that equates the amount received to the amount repaid?

Answer Options

A. Repayment: ₦550,000; Effective interest rate: 11.00 %
B. Repayment: ₦572,727; Effective interest rate: 14.55 %
Correct Answer C. Repayment: ₦568,182; Effective interest rate: 13.64 %
D. Repayment: ₦560,000; Effective interest rate: 12.00 %
Correct Answer
C
Correct Option:
Repayment: ₦568,182; Effective interest rate: 13.64 %

About This Question

This is Neco Model Questions Vol1 2017 Commerce Question 40. It is one of the objective questions from the 2017 Neco Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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