Practice neco model questions vol1 commerce 2024 Past Questions

Question 1 View Details

A company advertises a product using three media: TV, radio and newspaper. TV reaches (40\%\) of the target market, radio (30\%\), newspaper (25\%\). (10\%\) see both TV and radio, (8\%\) see both TV and newspaper, (5\%\) see both radio and newspaper, and (2\%\) see all three. What percentage of the target market are exposed to at least one of the three media?

A. 71

B. 80

Correct C. 74

D. 68

Correct Answer: C

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Question 2 View Details

A merchant obtains a loan with a face value of $\text{₦}500,000$. The loan is discounted at $5\%$, a processing fee of $2\%$ of the discounted amount is charged, and simple interest of $12\%$ per annum is payable at the end of six months. If the merchant repays the loan after six months, what is the effective annual interest rate (to two decimal places) on the amount actually received?

Correct A. 27.72

B. 22.50

C. 25.00

D. 30.15

Correct Answer: A

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Question 3 View Details

A wholesaler purchases goods at $\text{₦}150$ per unit. Fixed monthly costs are $\text{₦}200,000$. He sells to retailers with a $20\%$ markup on cost. For orders exceeding $1,000$ units, he gives a $5\%$ discount on the selling price for the whole order. Determine the minimum number of units the wholesaler must sell in a month to achieve a profit of at least $\text{₦}50,000$, assuming he may take at most one bulk order (with discount) and any remaining units are sold at the regular price.

Correct A. 8334

B. 8335

C. 8234

D. 8434

Correct Answer: A

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Question 4 View Details

A retailer buys goods for $\text{₦}120,000$ and sells them for $\text{₦}150,000$. What is the profit percentage on the cost price?

A. 22.5

Correct B. 25

C. 20

D. 30

Correct Answer: B

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Question 5 View Details

Three partners A, B and C invest in a partnership. A contributes $\text{₦}200,000$ for 6 months, B contributes $\text{₦}150,000$ for 9 months, and C contributes $\text{₦}250,000$ for 4 months. The partnership earns a net profit of $\text{₦}180,000$ at the end of the year. Profits are shared in proportion to each partner's capital multiplied by the time (in months) the capital was invested. How much profit does each partner receive?

A. A: 60845, B: 50704, C: 68451

Correct B. A: 60845, B: 68451, C: 50704

C. A: 61714, B: 69429, C: 51429

D. A: 60000, B: 45000, C: 75000

Correct Answer: B

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Question 6 View Details

A customer deposits ₦500,000 in a bank account that offers a nominal interest rate of $8\%$ per annum compounded quarterly. After exactly 2 years the bank deducts a maintenance fee equal to $1.5\%$ of the balance at the start of the third year. The remaining balance is then transferred to a different scheme that pays an effective annual interest rate of $6\%$ for the next 3 years. What is the total amount in the account at the end of the 5‑year period? Give your answer in Naira, rounded to two decimal places.

A. 680427.00

B. 688945.16

C. 697733.00

Correct D. 687266.45

Correct Answer: D

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Question 7 View Details

A consumer buys a washing machine for ₦120,000. The seller provides a 2‑year warranty that covers only parts. After 18 months the machine fails because of a motor defect, which is covered by the warranty. The consumer takes it to a repair shop that charges ₦15,000 for parts and ₦5,000 for labour. Under the Consumer Protection Act, if the cost of repair exceeds $30\%$ of the original purchase price, the consumer may reject the repair and demand a replacement or a refund. The consumer also purchased an extended service plan for ₦8,000, which guarantees free repairs for the first 2 years but expressly excludes motor defects. The repair does not restore the machine to working condition. The consumer therefore decides to claim a refund under the Act, which requires the seller to refund the purchase price minus a reasonable depreciation of $10\%$ per year of use. Compute the amount the consumer is entitled to receive as a refund. Give your answer in Naira, rounded to the nearest naira.

A. 108000

B. 96000

Correct C. 102000

D. 100000

Correct Answer: C

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Question 8 View Details

Three partners A, B and C form a partnership. Their initial capital contributions are ₦200,000, ₦150,000 and ₦100,000 respectively. The partnership agreement states that profit is shared in proportion to the amount of capital contributed and the length of time (in months) each capital remains in the business during the financial year. During the year, partner B withdraws ₦50,000 after 6 months, and partner C adds an additional ₦50,000 after 4 months. At the end of the year the partnership records a net profit of ₦180,000. Determine the amount of profit allocated to partner A. Give your answer in Naira, rounded to two decimal places.

A. 80000.00

Correct B. 78545.45

C. 77000.00

D. 79500.00

Correct Answer: B

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Question 9 View Details

An importer in Nigeria purchases electronic goods costing US$250,000. The exchange rate at the time of purchase is ₦460 per US$. The import is subject to a $5\%$ ad valorem tariff on the customs value (converted to Naira) and a $0.5\%$ insurance premium on the CIF value (cost, insurance and freight) expressed in Naira. The seller offers a $2\%$ cash discount if payment is made within 30 days; otherwise a $3\%$ interest per annum is charged on the amount due, calculated on a 365‑day basis. The importer pays after 45 days. Compute the total amount in Naira that the importer must pay, rounded to the nearest naira.

A. 119500000

B. 120800000

Correct C. 121773736

D. 122000000

Correct Answer: C

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Question 10 View Details

A wholesale trader purchases a batch of 800 units of a product at a total cost of ₦1,200,000. The supplier offers a trade discount of $6\%$ on the invoice amount if payment is made within 10 days; otherwise the full amount is payable. The trader intends to sell the units at a uniform selling price per unit. He expects a variable selling expense of ₦120 per unit and fixed overheads of ₦80,000 for the month. To achieve a target profit of ₦150,000 for the month, the trader must decide whether to take the early‑payment discount. Determine the minimum selling price per unit (in Naira) the trader should set if he (a) takes the discount, and (b) does not take the discount. Indicate which option yields the lower required selling price. Give your answers to two decimal places.

A. 1820.00,1910.00,discount

B. 1800.00,1900.00,no discount

Correct C. 1817.50,1907.50,discount

D. 1817.50,1907.50,no discount

Correct Answer: C

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Question 11 View Details

A trader buys 120 kg of rice at $\text{₦}150$ per kilogram. He sells half of the rice at a profit of 20% and the remaining half at a loss of 10%. What is the overall profit percentage on the whole transaction? Give your answer to one decimal place.

A. 9.0%

B. 4.0%

Correct C. 5.0%

D. 6.5%

Correct Answer: C

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Question 12 View Details

Partners A, B and C invest in a business as follows: A invests $\text{₦}20,000$ for 6 months but withdraws $\text{₦}5,000$ after 3 months; B invests $\text{₦}30,000$ for 4 months; C invests $\text{₦}25,000$ for 5 months. After the period the business makes a total profit of $\text{₦}12,000$. Profits are shared in proportion to each partner's capital‑time contribution. How much profit does partner A receive?

A. ₦4,200

B. ₦3,000

C. ₦2,800

Correct D. ₦3,600

Correct Answer: D

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Question 13 View Details

A home‑based seller marks up a product by 40% over its cost price. She then offers a seasonal discount of 15% on the marked price and finally a cash discount of $\text{₦}500$ on the discounted price. If the final selling price is $\text{₦}2,200$, determine the original cost price of the product. Give your answer in naira to two decimal places.

A. ₦2,150.45

Correct B. ₦2,268.91

C. ₦2,200.00

D. ₦2,300.00

Correct Answer: B

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Question 14 View Details

A company has 1,000,000 shares outstanding, each trading at $\text{₦}50$. It announces a 1‑for‑5 rights issue at a subscription price equal to 70% of the current market price. All rights are exercised and the market price adjusts to the theoretical ex‑rights price. After the rights issue the company reports total earnings of $\text{₦}5,000,000$ and declares a dividend of $\text{₦}2$ per share.\n\n(a) Calculate the new earnings per share (EPS) after the rights issue.\n(b) Determine the price‑earnings (P/E) ratio based on the new market price.\n(c) Compute the dividend yield (percentage) based on the new market price and the declared dividend.\nGive your answers to two decimal places.

A. EPS = ₦3.95, P/E = 12.10, Dividend yield = 4.50%

B. EPS = ₦4.25, P/E = 10.80, Dividend yield = 3.95%

C. EPS = ₦4.10, P/E = 11.80, Dividend yield = 4.00%

Correct D. EPS = ₦4.17, P/E = 11.40, Dividend yield = 4.21%

Correct Answer: D

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Question 15 View Details

A home baker sells a cake for $\text{₦}1,200$. The total cost of ingredients and utilities for the cake is $\text{₦}720$. What is the profit percentage earned on the cake? Give your answer to one decimal place.

A. 60.0%

Correct B. 66.7%

C. 75.0%

D. 55.0%

Correct Answer: B

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Question 16 View Details

A trader buys 120 units of product A at $\,\text{₦}2,500$ each and 80 units of product B at $\,\text{₦}3,200$ each. He sells product A with a profit margin of 20% on cost and product B with a profit margin of 15% on cost. What is his total profit in naira?

A. 102,000

B. 100,800

C. 96,000

Correct D. 98,400

Correct Answer: D

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Question 17 View Details

A small business needs to raise $\,\text{₦}5,000,000$. It can obtain a bank loan at 12% per annum, repayable over 5 years with equal annual payments, and it can also issue 10% debentures (interest paid annually). The business wants the total annual cash outflow for financing not to exceed $\,\text{₦}1,200,000$. What is the maximum amount that can be borrowed as a bank loan (in naira) while meeting this cash‑outflow limit?

A. 4,000,000

B. 3,850,000

Correct C. 3,948,000

D. 3,900,000

Correct Answer: C

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Question 18 View Details

A retailer has an annual demand of 12,000 units for a product. The ordering cost per order is $\,\text{₦}15,000$ and the holding cost is 25% of the unit cost per year. Each unit costs $\,\text{₦}2,400$. The warehouse can hold at most 300 units at any time. Using the Economic Order Quantity (EOQ) model but respecting the storage limit, determine the optimal order quantity (in units) and the resulting annual total relevant cost (ordering + holding) in naira.

A. Order quantity: 500 units; Annual total relevant cost: 500,000

Correct B. Order quantity: 600 units; Annual total relevant cost: 480,000

C. Order quantity: 300 units; Annual total relevant cost: 540,000

D. Order quantity: 700 units; Annual total relevant cost: 470,000

Correct Answer: B

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Question 19 View Details

A logistics company can use two types of trucks for a particular route. Truck X has a fixed cost per trip of $\,\text{₦}50,000$ and a variable cost of $\,\text{₦}120$ per kilometre. Truck Y has a fixed cost per trip of $\,\text{₦}30,000$, a loading fee of $\,\text{₦}5,000$ per trip, and a variable cost of $\,\text{₦}180$ per kilometre. For what distance (in kilometres, rounded to the nearest kilometre) will the total cost of using either truck be the same? State which truck is cheaper for distances greater than that value.

A. 250 km; Truck Y is cheaper for distances greater than 250 km

B. 200 km; Truck X is cheaper for distances greater than 200 km

C. 300 km; Truck Y is cheaper for distances greater than 300 km

Correct D. 250 km; Truck X is cheaper for distances greater than 250 km

Correct Answer: D

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Question 20 View Details

A shop sold 150 units of Item A at $\,\text{₦}4,000$ each, 80 units of Item B at $\,\text{₦}6,500$ each and 60 units of Item C at $\,\text{₦}9,200$ each. What is the average selling price per unit (in naira) for all items sold?

A. 5,765

Correct B. 5,766

C. 5,800

D. 5,700

Correct Answer: B

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Question 21 View Details

A consumer purchases a television with a marked price of ₦200,000. The retailer first gives a 10 % discount on the marked price, then a trade‑in allowance of ₦15,000 is deducted from the discounted price. Sales tax of 5 % is then added to the net price. The consumer also pays a delivery charge of ₦5,000, which is non‑refundable. After two weeks the consumer returns the television under the warranty. The store charges a restocking fee equal to 5 % of the amount the consumer actually paid (including tax but excluding delivery). What is the net monetary loss to the consumer?

A. ₦13,912.50

B. ₦8,662.50

C. ₦5,000.00

Correct D. ₦13,662.50

Correct Answer: D

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Question 22 View Details

An investor invests a total of ₦250,000 (including the purchase brokerage fee) to buy 500 shares of XYZ Ltd. The broker's purchase commission is 1.2 % of the purchase amount before commission. After six months the share price rises by 15 % (on the price before commission). The broker's selling commission is 0.8 % of the sale amount. A capital gains tax of 10 % is applied on the profit (sale amount after selling commission minus the total amount originally invested). During the holding period the investor receives a dividend of ₦2 per share, on which a dividend tax of 5 % is withheld at source. What is the investor's net percentage return on the original amount invested, expressed to two decimal places?

A. 11.85%

Correct B. 11.83%

C. 13.10%

D. 13.12%

Correct Answer: B

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Question 23 View Details

A supplier issues an invoice for ₦850,000 payable within 30 days. The buyer pays the invoice 45 days after the invoice date. The contract states that a penalty of 2 % per month (simple interest) is charged on the overdue amount, calculated on a 30‑day month basis. The buyer also missed a 1.5 % cash‑discount that would have applied if payment had been made within the original 30 days. Calculate (a) the total amount the buyer must now pay, including the penalty, (b) the effective annual interest rate represented by the penalty, and (c) the extra cost incurred because of the delay (penalty plus lost discount).

A. Total payable: ₦867,000; Effective annual interest: 24 %; Extra cost: ₦29,750

Correct B. Total payable: ₦858,500; Effective annual interest: 24 %; Extra cost: ₦21,250

C. Total payable: ₦858,500; Effective annual interest: 24 %; Extra cost: ₦17,000

D. Total payable: ₦858,500; Effective annual interest: 26.8 %; Extra cost: ₦21,250

Correct Answer: B

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Question 24 View Details

A retailer buys 200 units of a product for a total cost of ₦480,000 (including freight). He intends to set a marked price per unit that will allow a promotional discount of 12 % on the marked price while still achieving a gross profit margin of 30 % on the selling price after discount. What should be the marked price per unit (rounded to the nearest naira) before the discount is applied?

A. ₦3,850

Correct B. ₦3,896

C. ₦4,020

D. ₦3,750

Correct Answer: B

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Question 25 View Details

An advertising agency plans a TV campaign for a target audience of 2,500,000 people. The agency wants to achieve a total of 150 Gross Rating Points (GRPs). Each TV spot reaches 5 % of the target audience (i.e., a rating of 5). The cost of each spot is ₦120,000. A contingency of 7 % must be added to the total media‑buying cost. Determine (a) the minimum number of spots required, (b) the total media‑buying cost before adding contingency, (c) the total cost after adding contingency, and (d) the average cost per GRP achieved.

Correct A. Spots: 30; Cost before contingency: ₦3,600,000; Cost after contingency: ₦3,852,000; Cost per GRP: ₦25,680

B. Spots: 28; Cost before contingency: ₦3,360,000; Cost after contingency: ₦3,595,200; Cost per GRP: ₦23,968

C. Spots: 30; Cost before contingency: ₦3,600,000; Cost after contingency: ₦3,852,000; Cost per GRP: ₦26,000

D. Spots: 32; Cost before contingency: ₦3,840,000; Cost after contingency: ₦4,108,800; Cost per GRP: ₦27,392

Correct Answer: A

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