Practice neco model questions vol1 commerce 2023 Past Questions

Question 1 View Details

A consumer purchases a television with a marked price of ₦120,000. The seller first gives a $10\%$ discount, then a further $5\%$ discount on the reduced price, and finally adds VAT of $7.5\%$ on the discounted price. Because the TV was delivered after 30 days, the Consumer Protection Act requires a rebate of $2\%$ on the final amount payable. (a) Calculate the amount the consumer finally pays. (b) How much more or less would the consumer have paid if the seller had applied a single $15\%$ discount before adding VAT (no rebate)?

A. Final amount payable: ₦107,500.00; the consumer pays ₦2,200.00 less than with a single 15% discount before VAT.

Correct B. Final amount payable: ₦108,089.10; the consumer pays ₦1,560.90 less than with a single 15% discount before VAT.

C. Final amount payable: ₦108,500.00; the consumer pays ₦1,000.00 more than with a single 15% discount before VAT.

D. Final amount payable: ₦108,089.10; the consumer pays ₦1,560.90 more than with a single 15% discount before VAT.

Correct Answer: B

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Question 2 View Details

In a partnership, A, B and C invest capital of $₦200,000$, $₦300,000$ and $₦500,000$ respectively. The profit‑sharing agreement states that profit is divided in proportion to capital, and each partner who has been in the business for more than 5 years receives an additional $5\%$ of the total profit. Only A and C satisfy this condition. The partnership earned a net profit of $₦240,000$ before paying interest on a bank loan of $₦100,000$ at $8\%$ per annum for the year. Determine the amount each partner receives after the loan interest is deducted.

A. A: ₦50,000; B: ₦65,000; C: ₦125,000

B. A: ₦55,000; B: ₦60,000; C: ₦115,000

C. A: ₦53,360; B: ₦62,640; C: ₦115,000

Correct D. A: ₦53,360; B: ₦62,640; C: ₦116,000

Correct Answer: D

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Question 3 View Details

An investor buys 200 shares of XYZ at $₦1,200$ each and later buys another 150 shares at $₦1,350$ each. A brokerage fee of $0.5\%$ of the transaction value is charged on each purchase. The investor then sells 180 shares at a market price of $₦1,500$ each, paying a selling brokerage fee of $0.75\%$ of the sale value. The investor wishes to achieve a net profit of at least $₦30,000$ after all fees. What is the minimum market price per share at which the remaining 170 shares must be sold (with the same $0.75\%$ selling fee) to meet the target profit?

Correct A. Minimum selling price per remaining share ≈ ₦1,226

B. Minimum selling price per remaining share ≈ ₦1,210

C. Minimum selling price per remaining share ≈ ₦1,190

D. Minimum selling price per remaining share ≈ ₦1,240

Correct Answer: A

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Question 4 View Details

A retailer purchases a batch of 500 units of a product at a total cost of $₦250,000$, which includes freight of $₦20,000$ and a $5\%$ import duty on the product value (excluding freight). The retailer intends to apply a markup of $40\%$ on the unit cost (excluding freight and duty) and to offer a promotional discount of $10\%$ on the selling price to customers. Determine (a) the final selling price per unit after the discount, and (b) the minimum number of units that must be sold to achieve a profit of $₦75,000$ after accounting for the discount.

A. Final price per unit: ₦540.00; minimum units to sell: 1,500

B. Final price per unit: ₦545.00; minimum units to sell: 1,470

Correct C. Final price per unit: ₦552.00; minimum units to sell: 1,443

D. Final price per unit: ₦560.00; minimum units to sell: 1,400

Correct Answer: C

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Question 5 View Details

A home‑based baker sells 120 cupcakes at $₦500$ each. She pays a commission of $8\%$ on total sales to a delivery service and a flat tax of $₦5,000$ on the net revenue after commission. Determine her net profit.

A. ₦50,000

B. ₦55,200

Correct C. ₦50,200

D. ₦45,200

Correct Answer: C

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Question 6 View Details

A company plans to send promotional letters. The fixed design cost is ₦12,000. The printing cost per letter is ₦150 for the first 2,000 letters and ₦120 for each additional letter. A tax of $5\%$ is added on the total cost (design plus printing). The company has a budget of ₦800,000. Determine the maximum number of letters that can be printed without exceeding the budget, and calculate the average cost per letter (including tax) for that maximum number.

Correct A. Maximum letters = 5,749; average cost per letter ≈ ₦139.15

B. Maximum letters = 5,800; average cost per letter ≈ ₦138.90

C. Maximum letters = 5,600; average cost per letter ≈ ₦140.20

D. Maximum letters = 5,749; average cost per letter ≈ ₦138.00

Correct Answer: A

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Question 7 View Details

A firm has a total advertising budget of ₦2,000,000. It can purchase TV spots at ₦250,000 each and Radio spots at ₦80,000 each. The first TV spot reaches 150,000 audience members; each additional TV spot reaches 10\% fewer new members than the preceding TV spot. The first Radio spot reaches 50,000 audience members; each additional Radio spot reaches 5\% fewer new members than the preceding Radio spot. At least one TV spot and one Radio spot must be bought. Find the numbers of TV and Radio spots that maximise total audience reach without exceeding the budget, and state the maximum reach obtained.

A. 5 TV spots and 9 Radio spots; maximum reach ≈ 970,000 individuals

Correct B. 5 TV spots and 9 Radio spots; maximum reach ≈ 984,265 individuals

C. 6 TV spots and 8 Radio spots; maximum reach ≈ 989,300 individuals

D. 4 TV spots and 10 Radio spots; maximum reach ≈ 970,120 individuals

Correct Answer: B

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Question 8 View Details

A washing machine is advertised at ₦150,000. The store offers a 12\% seasonal discount, then adds a 5\% sales tax on the discounted price. The consumer pays the resulting amount. Later the consumer discovers a defect and, under consumer‑protection law, is entitled to a refund of the full purchase price plus a compensation equal to 15\% of the original advertised price. The store deducts a restocking fee of 8\% of the amount refunded (excluding the compensation). Determine the net amount the consumer receives after the refund and compensation, and state the percentage gain or loss relative to the amount actually paid.

Correct A. Net amount received = ₦150,012; this is a gain of approximately 8.23\% over the amount paid

B. Net amount received = ₦148,800; this is a loss of approximately 1.20\% over the amount paid

C. Net amount received = ₦150,500; this is a gain of approximately 8.00\% over the amount paid

D. Net amount received = ₦151,200; this is a gain of approximately 9.45\% over the amount paid

Correct Answer: A

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Question 9 View Details

A retailer sells two products, A and B. Product\,A is sold with a 40\% markup on its cost price, while product\,B is sold with a 25\% markup on its cost price. In a month, the revenue from product\,A is twice that from product\,B, and the combined revenue is ₦525,000. The total cost of goods sold for the two products together is ₦390,000. Find the individual cost price of product\,A and product\,B.

A. Cost price of product A = ₦260,000; cost price of product B = ₦130,000

B. Cost price of product A = ₦240,000; cost price of product B = ₦150,000

Correct C. Cost price of product A = ₦250,000; cost price of product B = ₦140,000

D. Cost price of product A = ₦255,000; cost price of product B = ₦135,000

Correct Answer: C

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Question 10 View Details

A company runs a communication campaign using two channels: social‑media posts and radio ads. Each social‑media post costs ₦5,000 and initially reaches 8,000 unique individuals; each subsequent post reaches 10\% fewer new individuals than the previous post (i.e., the second post reaches $8{,}000\times0.9$, the third $8{,}000\times0.9^{2}$, etc.). Each radio ad costs ₦20,000 and initially reaches 30,000 individuals; each additional radio ad reaches 5\% fewer new individuals than the previous ad. The campaign must reach at least 200,000 unique individuals. Determine the combination of social‑media posts and radio ads that meets or exceeds the target with the minimum total cost, and give the total cost and the total number of individuals reached.

A. 7 radio ads and 6 social‑media posts; total cost = ₦170,000; total reach ≈ 203,500 individuals

B. 6 radio ads and 8 social‑media posts; total cost = ₦160,000; total reach ≈ 209,200 individuals

C. 5 radio ads and 8 social‑media posts; total cost = ₦140,000; total reach ≈ 197,800 individuals

Correct D. 6 radio ads and 7 social‑media posts; total cost = ₦155,000; total reach ≈ 200,676 individuals

Correct Answer: D

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Question 11 View Details

A small business needs $\text{₦}5{,}000{,}000$ for expansion. It can obtain financing from two sources: a bank loan with 12% per annum simple interest payable at the end of 3 years, and a private investor who will provide a capital grant of $\text{₦}2{,}000{,}000$ but requires a 5% profit share on the net profit after 3 years. The business expects to generate a net profit of $\text{₦}1{,}200{,}000$ per year from the expansion. Assuming the business will use the bank loan for the remaining amount needed, which source of finance results in a lower total cost to the business after 3 years? State the cheaper source.

A. Both sources cost the same

B. Bank loan

C. No financing required

Correct D. Private investor

Correct Answer: D

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Question 12 View Details

In a given year, Country A exported goods worth $\$45$ million and imported goods worth $\$52$ million. What is Country A's trade balance for that year (in million dollars)?

A. -6

B. 7

Correct C. -7

D. -8

Correct Answer: C

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Question 13 View Details

A firm raises capital through 60% equity at a cost of 15% per annum and 40% debt at a nominal interest rate of 10% per annum. The corporate tax rate is 30%, and interest on debt is tax‑deductible. Calculate the firm's weighted average cost of capital (WACC) after tax, expressed as a percentage.

Correct A. 11.8

B. 12.3

C. 10.5

D. 13

Correct Answer: A

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Question 14 View Details

A customer can deposit $\text{₦}500{,}000$ in Bank X which offers 8% per annum compounded quarterly, or in Bank Y which offers 7.5% per annum compounded monthly. After 2 years, which deposit yields a higher amount? Compute the final amounts for both banks and state the bank that gives the larger return.

A. Neither bank yields a higher return

B. Both banks yield the same amount

Correct C. Bank X

D. Bank Y

Correct Answer: C

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Question 15 View Details

An insurance company estimates the expected annual loss from fire for a small shop to be $\text{₦}120{,}000$. The company adds a loading of 25% to cover administrative expenses and then adds a profit margin of 10% on the loaded premium. What annual premium should the company charge the shop? Give your answer in naira.

A. 177000

B. 162000

C. 150000

Correct D. 165000

Correct Answer: D

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Question 16 View Details

A home trader buys 20 units of a product at $\N{Naira}150$ each. He adds a profit margin of 25% on the total cost and then offers a discount of 10% on the marked price to a customer. What is the final selling price per unit (in $\N{Naira}$)?

Correct A. 168.75

B. 175.00

C. 157.50

D. 162.00

Correct Answer: A

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Question 17 View Details

A wholesaler purchases 800 units of a product at $\N{Naira}80$ each. He adds a markup of 30% on cost to set the wholesale price, then gives a trade discount of 5% to retailers and pays a commission of 2% of the net selling price to the sales agent. If the wholesaler wants a net profit of $\N{Naira}12,000$ after discounts and commission, how many units must he sell?

Correct A. 785

B. 750

C. 800

D. 795

Correct Answer: A

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Question 18 View Details

A wholesaler lists a product at $\N{Naira}250$ per unit. He offers a trade discount of 12% to a retailer, and the retailer adds a sales tax (VAT) of 7.5% on the discounted price. If the wholesaler's cost per unit is $\N{Naira}150$, what is the wholesaler's profit margin (as a percentage) on the final amount received after tax?

A. 55.0

B. 48.3

Correct C. 57.7

D. 62.5

Correct Answer: C

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Question 19 View Details

A small shop records its daily sales for a week as follows (in $\N{Naira}$): 12,500; 13,200; 11,800; 14,000; 13,500; 12,900; 13,300. What is the average daily sales for the week?

Correct A. 13028.57

B. 12875.00

C. 13100.00

D. 12950.00

Correct Answer: A

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Question 20 View Details

A consumer buys a washing machine for $\N{Naira}120,000$. The seller offers a 2‑year warranty covering parts only. The machine depreciates linearly to zero over 8 years. After 3 years the machine breaks down and the repair cost is $\N{Naira}15,000$ (12.5% of the original price). Under consumer‑protection law the consumer may return the machine within 30 days of repair and receive a refund of its current depreciated value, but the seller charges a restocking fee of 5% of that value. Should the consumer return the machine for a refund or keep it and pay for the repair? Show the total cost for each option and state the cheaper choice.

A. Return the machine; total cost = \N{Naira}15,000 (cheaper than keeping which would cost \N{Naira}48,750)

B. Return the machine; total cost = \N{Naira}48,750 (cheaper than keeping which would cost \N{Naira}15,000)

C. Keep the machine; total cost = \N{Naira}48,750 (cheaper than returning which would cost \N{Naira}15,000)

Correct D. Keep the machine; total cost = \N{Naira}15,000 (cheaper than returning which would cost \N{Naira}48,750)

Correct Answer: D

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Question 21 View Details

A partnership of three partners A, B and C initially share profit in the ratio 3:2:1 and contributed capital of N $30,000$, N $20,000$ and N $10,000$ respectively. After two years, A withdraws N $5,000$ from his capital and the profit‑sharing ratio is revised to be proportional to the partners' remaining capital contributions. In the third year the total profit is N $48,000$. What amount does partner B receive as his share of profit in the third year?

Correct A. 17,454.55

B. 15,000.00

C. 18,181.82

D. 16,363.64

Correct Answer: A

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Question 22 View Details

A wholesaler purchases goods at 60 % of the marked price. He then adds a markup of 25 % on his cost to set the price for retailers. Retailers give a discount of 10 % on that price to consumers. If the consumer price is N $12,000$, what was the original marked price?

A. 18,888.89

B. 15,555.56

C. 16,666.67

Correct D. 17,777.78

Correct Answer: D

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Question 23 View Details

A customer deposits N $150,000$ in a bank account that pays 12 % per annum nominal interest compounded quarterly. After 18 months the customer withdraws N $30,000$, and the remaining balance continues to earn interest at the same rate for another 2 years. What is the total amount in the account at the end of the 3.5‑year period?

Correct A. 188,885

B. 180,000

C. 190,500

D. 195,000

Correct Answer: A

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Question 24 View Details

A company plans a 6‑month advertising campaign with a total budget of N $9,600,000$. The budget is to be allocated among TV, radio and online media subject to the following conditions:\n\n- The online budget must be 30 % of the total budget.\n- The TV budget must be at least twice the radio budget.\n- The expected reach (in thousands of people) per N $1,000$ spent is: TV = 8, radio = 5, online = 12.\n- The total expected reach must be at least 80,000 thousand people.\n\nWhat is the minimum possible TV budget (in Naira) that satisfies all the conditions?

A. 4,200,000

Correct B. 4,480,000

C. 4,560,000

D. 4,720,000

Correct Answer: B

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Question 25 View Details

A retailer buys inventory for N $500,000$. He marks up the goods by 30 % on cost to set the list price. He then offers a trade discount of 12 % on the list price to a wholesaler and, if the wholesaler pays within 10 days, an additional early‑payment discount of 5 % on the discounted price. After these discounts, a value‑added tax (VAT) of 7.5 % is added to the invoice amount. The retailer's overhead costs for the transaction are N $45,000$. Assuming the wholesaler takes the early‑payment discount, what is the retailer's net profit on the transaction?

Correct A. 39,155

B. 40,155

C. 38,155

D. 35,000

Correct Answer: A

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