Neco Model Questions Vol1 2019 Commerce Question 25

Practice objective / multiple choice question 25 from the 2019 Neco Model Questions Vol1 Commerce examination.

Neco Model Questions Vol1 2019 Commerce Objective / Multiple Choice Medium Difficulty
Question 25 NECO_MODEL_QUESTIONS_VOL1 • 2019 • COMMERCE • objective

A business obtains a loan of ₦5,000,000 from a bank. The nominal annual interest rate is 12% compounded monthly. The bank also charges a processing fee of 1.5% of the loan amount, payable upfront, and a monthly service charge of ₦10,000. The loan is to be repaid in equal monthly installments over 3 years. Determine (a) the total monthly installment amount (including the service charge), (b) the total amount repaid over the loan term, and (c) the effective annual interest rate (EAR) that reflects the impact of the processing fee and service charges, expressed as a percentage to two decimal places.

Answer Options

Correct Answer A. ₦175,938; ₦6,333,768; 18.52%
B. ₦180,250; ₦6,489,000; 19.10%
C. ₦176,800; ₦6,364,800; 18.20%
D. ₦170,500; ₦6,138,000; 17.85%
Correct Answer
A
Correct Option:
₦175,938; ₦6,333,768; 18.52%

About This Question

This is Neco Model Questions Vol1 2019 Commerce Question 25. It is one of the objective questions from the 2019 Neco Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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