Practice neco model questions vol1 commerce 2018 Past Questions

Question 1 View Details

A retailer marks a product at ₦12,000. He offers a \(10\%\) discount on the marked price, then an additional \(5\%\) discount on the reduced price. After the discounts he adds a sales tax of \(7.5\%\) on the selling price. If he wants a profit margin of \(20\%\) on his cost price after tax, what is the greatest cost price he can have (in naira)?

A. 9250.00

B. 9100.75

Correct C. 9191.25

D. 9385.40

Correct Answer: C

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Question 2 View Details

A wholesaler purchases 500 units of a product. The supplier gives a \(12\%\) discount on the total invoice for orders above 400 units. The wholesaler sells each unit for \(\text{₦}250\). Fixed monthly overhead is \(\text{₦}15,000\). To earn at least \(\text{₦}30,000\) profit for the month, what is the maximum unit cost price the wholesaler can afford (in naira, to two decimal places)?

A. 180.00

B. 175.00

C. 190.91

Correct D. 181.82

Correct Answer: D

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Question 3 View Details

Three partners invest capital for different periods in a business. Partner A invests \(\text{₦}50,000\) for 6 months, Partner B invests \(\text{₦}30,000\) for 9 months, and Partner C invests \(\text{₦}20,000\) for 12 months. At the end of the year the partnership makes a total profit of \(\text{₦}84,000\). Profits are shared in proportion to the product of capital and time (capital \(\times\) months). How much profit does each partner receive (in naira, to two decimal places)?

Correct A. 31111.11, 28000.00, 24888.89

B. 18666.67, 28000.00, 37333.33

C. 42000.00, 25200.00, 16800.00

D. 44210.53, 39789.47, 0.00

Correct Answer: A

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Question 4 View Details

An insurance company offers a policy with a sum assured of \(\text{₦}500,000\). The expected claim probability is \(0.02\). The company adds a loading of \(25\%\) on the pure premium and then a policy tax of \(5\%\) on the loaded premium. If the company wants a net profit margin of \(12\%\) on the total premium collected, what should be the gross premium charged per policy (in naira, to two decimal places)?

A. 14204.55

B. 13125.00

C. 14625.00

Correct D. 14915.91

Correct Answer: D

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Question 5 View Details

A warehouse charges storage fees based on volume as follows: \(\text{₦}150\) per cubic metre per month for the first 100 m³, \(\text{₦}120\) per cubic metre per month for the next 200 m³ (i.e., from 100 m³ up to 300 m³), and \(\text{₦}100\) per cubic metre per month for any volume above 300 m³. In addition there is a fixed handling charge of \(\text{₦}2,500\) per month regardless of volume. A client wishes to store goods for 4 months and the total cost must not exceed 20 % of the expected revenue of \(\text{₦}500,000\). What is the maximum total volume (in cubic metres, to one decimal place) the client can store without breaching the cost constraint?

A. 125.0

B. 175.0

Correct C. 162.5

D. 150.0

Correct Answer: C

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Question 6 View Details

A bank offers a loan of \(\text{₦}500,000\) repayable in a single lump sum after 3 years. The loan carries a nominal annual interest rate of \(12\%\) convertible semi‑annually and a processing fee equal to \(2\%\) of the loan amount payable at the start. Another bank offers the same loan amount with an effective annual interest rate of \(11\%\) and no processing fee. Which bank provides the lower total cost to the borrower? State the total amount payable under each offer (rounded to the nearest naira) and indicate the cheaper option.

Correct A. Bank B is cheaper; total cost ≈ ₦683,816 (Bank A total cost ≈ ₦719,257).

B. Bank A is cheaper; total cost ≈ ₦680,000 (Bank B total cost ≈ ₦718,000).

C. Bank A is cheaper; total cost ≈ ₦683,816 (Bank B total cost ≈ ₦719,257).

D. Bank B is cheaper; total cost ≈ ₦690,000 (Bank A total cost ≈ ₦720,000).

Correct Answer: A

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Question 7 View Details

An investor holds 200 shares of Company X bought at \(\text{₦}150\) each and 150 shares of Company Y bought at \(\text{₦}240\) each. Company X pays an annual dividend equal to \(5\%\) of its market price, while Company Y pays \(4\%\) of its market price. The investor wants an overall annual return of \(12\%\) on the total investment (including dividends and capital gains). Assuming the shares are sold at the end of the year, the price of Company X is expected to rise by \(8\%\) over its purchase price. What minimum selling price per share of Company Y must be set to achieve the target return?

Correct A. ≈ ₦255.77 per share

B. ≈ ₦250.45 per share

C. ≈ ₦260.00 per share

D. ≈ ₦245.30 per share

Correct Answer: A

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Question 8 View Details

An advertising agency plans a campaign using two media. Each TV spot costs \(\text{₦}80,000\) and delivers \(0.8\) GRP. Each radio ad costs \(\text{₦}20,000\) and delivers \(0.25\) GRP. The client requires at least \(120\) GRPs, wants the average cost per GRP not to exceed \(\text{₦}100,000\), and insists that at least \(30\%\) of the total GRPs come from TV. Determine the minimum total cost of the campaign that satisfies all constraints and give the number of TV spots and radio ads required.

A. Minimum cost = ₦9,840,000; 42 TV spots and 350 radio ads.

B. Minimum cost = ₦11,040,000; 50 TV spots and 300 radio ads.

C. Minimum cost = ₦10,560,000; 48 TV spots and 320 radio ads.

Correct D. Minimum cost = ₦10,320,000; 45 TV spots and 336 radio ads.

Correct Answer: D

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Question 9 View Details

A trader first buys 1,000 shares of Company Z at \(\text{₦}200\) each. Later he buys another 600 shares at a price 12% higher than the first purchase price. He then sells 800 shares at a price that is 8% lower than the average purchase price of the shares he still holds after the sale. Capital‑gains tax is 15% on any profit. The trader wants the net proceeds from the sale (after tax) to be at least \(\text{₦}150,000\). What is the minimum selling price per share (in naira) he must set?

Correct A. ≈ ₦187.51 per share

B. ≈ ₦180.00 per share

C. ≈ ₦175.30 per share

D. ≈ ₦192.75 per share

Correct Answer: A

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Question 10 View Details

A small business can raise \(\text{₦}2,000,000\) for four years by either (A) a bank loan with a nominal annual interest rate of \(10\%\) payable annually and a processing fee of \(1\%\) of the loan amount, or (B) issuing 5‑year bonds with a face value of \(\text{₦}1,000\) each, sold at \(96\%\) of face value and paying an annual coupon of \(6\%\) of face value. The business needs exactly \(\text{₦}2,000,000\) in net proceeds. Which financing option results in the lower total interest cost over the four‑year period, and what is that total interest cost (rounded to the nearest naira)?

Correct A. Bond issue is cheaper; total interest cost ≈ ₦583,520.

B. Bank loan is cheaper; total interest cost ≈ ₦610,000.

C. Bond issue is cheaper; total interest cost ≈ ₦620,000.

D. Bond issue is cheaper; total interest cost ≈ ₦550,000.

Correct Answer: A

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Question 11 View Details

A telecom company offers a prepaid plan where the first 2 minutes of a call cost ₦150 total and each additional minute costs ₦40. There is a fixed activation fee of ₦200 per call. The company also adds a 5 % service tax on the total amount before tax. A customer makes a call lasting 7 minutes and 30 seconds, and the company charges a full minute for any part of a minute used. (a) Determine the total amount the customer must pay. (b) If the company's cost for handling that call is ₦120, calculate the profit‑margin percentage earned on the call.

Correct A. Total amount = ₦619.5; profit‑margin ≈ 80.63 %

B. Total amount = ₦625.5; profit‑margin ≈ 82.10 %

C. Total amount = ₦610.0; profit‑margin ≈ 78.45 %

D. Total amount = ₦599.5; profit‑margin ≈ 77.20 %

Correct Answer: A

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Question 12 View Details

A delivery truck travels from point A to B (120 km) at an average speed of 60 km/h, then from B to C (80 km) at 48 km/h. At B the driver stops for 15 minutes. (a) Find the overall average speed for the whole journey, including the stop. (b) The truck consumes fuel at 12 L per 100 km on the first leg and 10 L per 100 km on the second leg. If fuel costs ₦150 per litre, calculate the total fuel cost for the trip.

A. Average speed ≈ 49.80 km\/h; total fuel cost = ₦3420

Correct B. Average speed ≈ 51.06 km/h; total fuel cost = ₦3360

C. Average speed ≈ 52.30 km\/h; total fuel cost = ₦3300

D. Average speed ≈ 50.00 km\/h; total fuel cost = ₦3500

Correct Answer: B

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Question 13 View Details

A consumer purchases a washing machine for ₦85,000. The machine is covered by a 2‑year warranty that only covers parts. After 18 months the consumer returns the machine because of a fault. The store's policy is: (i) a depreciation of 15 % per year (pro‑rated for months) is deducted from the purchase price, (ii) a restocking fee of 5 % of the original purchase price is also deducted, and (iii) the consumer receives a 2 % cash‑back on the amount that remains after the first two deductions. What is the final cash amount the consumer receives?

A. ₦61,625

B. ₦63,832.9

C. ₦69,360

Correct D. ₦62,857.5

Correct Answer: D

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Question 14 View Details

An importer buys goods valued at ₦250,000. Customs duty is charged at 12 % of the goods' value. After the duty is added, a value‑added tax (VAT) of 5 % is applied on the sum of the goods' value and the duty. What is the total amount payable by the importer?

A. ₦280,000

Correct B. ₦294,000

C. ₦292,500

D. ₦288,750

Correct Answer: B

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Question 15 View Details

A home‑based baker buys raw materials costing ₦45,000 for each batch, which yields 20 cakes. Each cake is sold for ₦3,500. The baker pays a market‑stall rent of ₦5,000 per day and electricity of ₦1,200 per day. She works 5 days a week and sells all the cakes each day. (a) Calculate her weekly profit if no discount is offered. (b) If she gives a 10 % discount on every third cake sold, what is her adjusted weekly profit, assuming she still sells exactly 20 cakes each day?

Correct A. Without discount: ₦94,000; with discount: ₦83,500

B. Without discount: ₦92,500; with discount: ₦82,000

C. Without discount: ₦95,000; with discount: ₦84,000

D. Without discount: ₦90,000; with discount: ₦80,500

Correct Answer: A

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Question 16 View Details

A retailer advertises a television with a marked price of ₦150,000. The retailer offers a \(12\%\) discount on the marked price. After the discount, a sales tax of \(5\%\) is added to the discounted price. The consumer also pays a non‑refundable warranty fee of ₦8,000 at the time of purchase. The consumer later returns the television because it is defective. The retailer refunds only the discounted price (excluding tax) and does not refund the warranty fee. What is the total amount (in Naira) that the consumer loses as a result of the return?

Correct A. 14600

B. 14400

C. 15600

D. 13600

Correct Answer: A

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Question 17 View Details

A warehouse handles a product with an annual demand of 12,000 units. The ordering cost per order is ₦2,500. The annual holding cost is known to be ₦45,000 and is calculated as \(\frac{\text{EOQ}}{2}\) times the holding cost per unit per year. The holding cost per unit per year equals \(25\%\) of the unit cost. Determine the unit cost of the product and the Economic Order Quantity (EOQ) the warehouse should use.

Correct A. Unit cost = ₦540; EOQ ≈ 667 units

B. Unit cost = ₦540; EOQ ≈ 600 units

C. Unit cost = ₦600; EOQ ≈ 600 units

D. Unit cost = ₦500; EOQ ≈ 750 units

Correct Answer: A

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Question 18 View Details

A transport company charges a flat fee per trip plus a variable rate per kilometre. For a 150 km trip the total charge is ₦45,000, and for a 250 km trip the total charge is ₦65,000. Determine the flat fee per trip and the variable charge per kilometre, then calculate the total charge for a 180 km trip.

A. Flat fee = ₦18000; Variable charge = ₦150 per km; Total for 180 km = ₦45000

Correct B. Flat fee = ₦15000; Variable charge = ₦200 per km; Total for 180 km = ₦51000

C. Flat fee = ₦15000; Variable charge = ₦180 per km; Total for 180 km = ₦47400

D. Flat fee = ₦12000; Variable charge = ₦250 per km; Total for 180 km = ₦57000

Correct Answer: B

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Question 19 View Details

A delivery driver travels from point A to B covering a total distance of 120 km. The first 40 km are on a highway with a speed limit of 80 km/h, the next 50 km are on a secondary road with a speed limit of 60 km/h, and the remaining distance is on a city road with a speed limit of 40 km/h. Because of traffic, the driver actually travels 10\% slower than the speed limit on each segment. Calculate the total travel time in hours and minutes.

Correct A. 2 hours 19 minutes

B. 2 hours 30 minutes

C. 2 hours 5 minutes

D. 1 hour 55 minutes

Correct Answer: A

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Question 20 View Details

An importer in Nigeria purchases goods priced at €50,000. The exchange rate is ₦560 per euro. The goods are subject to a 5\% import duty and a 2\% surcharge on the duty amount. The importer receives a 3\% discount on the total cost (including duty and surcharge) for early payment. Determine the total amount in Naira the importer must pay after applying the discount.

Correct A. 28545160

B. 28588000

C. 29088360

D. 28518000

Correct Answer: A

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Question 21 View Details

A retailer faces an annual demand of \(12\,000\) units for a product. Each order incurs a fixed ordering cost of \(\text{₦}500\). The holding cost is \(20\%\) of the unit cost per year. The supplier offers two price tiers: if the order quantity is at least \(800\) units the unit cost is \(\text{₦}150\); otherwise the unit cost is \(\text{₦}180\). Determine the order quantity that minimises the total annual cost (ordering + holding + purchase) and state that minimum total cost.

A. Order quantity = 750 units; Minimum total annual cost = ₦1,845,000

B. Order quantity = 800 units; Minimum total annual cost = ₦1,850,000

C. Order quantity = 900 units; Minimum total annual cost = ₦1,795,200

Correct D. Order quantity = 800 units; Minimum total annual cost = ₦1,819,500

Correct Answer: D

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Question 22 View Details

A shopkeeper buys \(50\) units of an item for a total of \(\text{₦}2\,400\). He sells \(30\) units at \(\text{₦}60\) each and the remaining \(20\) units at a \(10\%\) discount on the original selling price. What is his total profit?

A. ₦600

B. ₦420

Correct C. ₦480

D. ₦540

Correct Answer: C

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Question 23 View Details

A wholesaler purchases goods at a cost that is \(70\%\) of the list price (LP). He gives retailers a trade discount of \(12\%\) on LP and then adds a markup of \(25\%\) on the discounted price to obtain his selling price (SP) to retailers. Retailers sell to consumers with a \(30\%\) profit margin on their purchase price. If the final consumer price is \(\text{₦}2\,200\), determine the wholesaler's list price and his profit per unit.

Correct A. List price ≈ ₦1,538; Wholesaler profit per unit ≈ ₦615

B. List price ≈ ₦1,600; Wholesaler profit per unit ≈ ₦580

C. List price ≈ ₦1,450; Wholesaler profit per unit ≈ ₦650

D. List price ≈ ₦1,500; Wholesaler profit per unit ≈ ₦630

Correct Answer: A

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Question 24 View Details

An insurance company calculates the fire‑insurance premium as follows: basic premium = \(0.5\%\) of the insured value; a loading of \(20\%\) is added to the basic premium; a government tax of \(5\%\) is applied to the sum of basic premium and loading; if the insured value exceeds \(\text{₦}5\,000\,000\) a volume discount of \(10\%\) is given on the total (including tax). Find the final premium payable for an insured value of \(\text{₦}7\,200\,000\).

A. ₦38,500

B. ₦42,000

Correct C. ₦40,824

D. ₦44,200

Correct Answer: C

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Question 25 View Details

A bank offers a 12‑month loan at a simple interest rate of \(15\%\) per annum and charges a processing fee equal to \(2\%\) of the loan principal, payable at the start. A borrower needs to receive net proceeds of exactly \(\text{₦}480\,000\) after the fee is deducted. What is the maximum loan principal the borrower should apply for, and what will be the total amount payable at the end of the year (principal + interest)?

Correct A. Maximum principal ≈ ₦489,796; Total repayment ≈ ₦563,265

B. Maximum principal ≈ ₦475,000; Total repayment ≈ ₦553,750

C. Maximum principal ≈ ₦460,000; Total repayment ≈ ₦540,800

D. Maximum principal ≈ ₦500,000; Total repayment ≈ ₦575,000

Correct Answer: A

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