Neco Model Questions Vol1 2021 Commerce Question 36
Practice objective / multiple choice question 36 from the 2021 Neco Model Questions Vol1 Commerce examination.
An exporter sells 2,000 units of a product. The FOB price is \(\$15\) per unit and the freight cost is \(\$3\) per unit. The importing country imposes a 12 % ad valorem tariff on the CIF value (CIF = FOB + freight). At the time of contract the exchange rate is \(\text{₦}410\) per US\(\$\), and the exporter quotes a selling price in Naira that includes a 10 % profit margin on the total cost (FOB + freight + tariff) calculated at this rate. Before payment the Naira depreciates to \(\text{₦}425\) per US\(\$\). Assuming the exporter receives only the CIF amount in US\(\$\) and must pay the tariff, what is the loss in Naira incurred because of the exchange‑rate change?
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About This Question
This is Neco Model Questions Vol1 2021 Commerce Question 36. It is one of the objective questions from the 2021 Neco Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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