Practice waec model questions vol1 commerce 2020 Past Questions

Question 1 View Details

An insurance company calculates the motor insurance premium as follows: 5% of the insured value (IV) is the base premium; a loading of 20% of the base premium is added; a government tax of 2.5% is then applied to the sum of base premium and loading. Customers who had no claim in the previous year receive a 10% discount on the total (including tax). If the insurer expects, on average, one claim costing ₦500,000 for every 0.02 policies per year, what is the minimum insured value (in whole Naira) that a customer must insure so that, after the discount, the premium is at least equal to the expected claim cost?

A. ₦9,500,000

B. ₦10,200,000

C. ₦8,500,000

Correct D. ₦9,033,424

Correct Answer: D

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Question 2 View Details

An investor bought 200 shares of Company X at ₦1,200 each. He later bought another 150 shares at a price 8% higher than the first purchase price. He then sold 180 shares at a price that is 12% above the average cost price of all shares he owned before the sale. Brokerage fee is 0.5% of the transaction value for each purchase and for the sale, and a capital gains tax of 10% is charged on the profit from the sale after deducting brokerage. Calculate the net profit (or loss) the investor realised from the sale, rounded to the nearest Naira.

A. ₦30,500

B. ₦-5,200

Correct C. ₦23,002

D. ₦15,000

Correct Answer: C

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Question 3 View Details

A transport company runs a bus service between City A and City B, a distance of 320 km. The bus seats 50 passengers. Fixed operating cost per trip is ₦45,000 and the variable cost is ₦120 per kilometre per bus. The company offers a 15% early‑booking discount to passengers who book at least 7 days in advance. If 80% of the seats are sold with the discount and the remaining seats are sold at the full fare, what should be the full fare (per passenger) so that the company makes a profit of at least ₦30,000 per trip? Give the answer rounded up to the nearest Naira.

A. ₦2,610

B. ₦2,450

Correct C. ₦2,578

D. ₦2,720

Correct Answer: C

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Question 4 View Details

A store advertises a washing machine with a marked price of ₦150,000. The store first applies a seasonal price increase of 12% on the marked price, then gives a promotional discount of 18% on the increased price, and finally adds a value‑added tax (VAT) of 7.5% to the discounted price. The Consumer Protection Act caps the final selling price at 115% of the original marked price; if the computed final price exceeds this cap, the store must reduce the price to the cap. What is the final selling price the consumer will pay, and does the store have to apply the cap?

Correct A. ₦148,092; cap not applied

B. ₦149,500; cap applied

C. ₦148,500; cap applied

D. ₦147,000; cap not applied

Correct Answer: A

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Question 5 View Details

A warehouse stores boxes of product P. Each box measures 0.5 m × 0.4 m × 0.3 m. Boxes are stacked on pallets; a pallet can hold up to 4 layers of boxes, and each layer may contain a rectangular arrangement of boxes with no gaps, but no more than 150 boxes per layer because of weight limits. The warehouse floor area allocated for this product is 120 m² and the ceiling height is 3.6 m. The cost of using a pallet is ₦2,500 per pallet per month, while the handling cost per box is ₦150 per month. The company must store exactly 2,400 boxes for one month. Determine the minimum total monthly cost (pallet cost + handling cost) and the number of pallets required to achieve this minimum.

A. ₦380,000; 3 pallets

B. ₦375,000; 4 pallets

C. ₦360,000; 5 pallets

Correct D. ₦370,000; 4 pallets

Correct Answer: D

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Question 6 View Details

A shop sells three types of goods. Type A is sold at ₦1,500 each and 20 units are sold. Type B is sold at ₦2,500 each and 15 units are sold. Type C is sold at ₦1,200 each and 30 units are sold. What is the total sales revenue for the shop?

A. ₦102,500

B. ₦104,700

Correct C. ₦103,500

D. ₦99,900

Correct Answer: C

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Question 7 View Details

A home‑based bakery has fixed monthly costs of ₦120,000. The variable cost to produce one cake is ₦800 and the normal selling price per cake is ₦1,200. If the baker offers a 10 % discount on each cake when she sells more than 200 cakes in a month, what is the minimum number of cakes she must sell in a month to break even (i.e., to make zero profit)?

A. 450 cakes

Correct B. 429 cakes

C. 415 cakes

D. 400 cakes

Correct Answer: B

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Question 8 View Details

A trader imports goods whose invoice value is ₦500,000. He pays a freight charge equal to 5 % of the invoice value and an insurance premium equal to 2 % of the sum of the invoice value and the freight charge. What is the total landed cost of the goods?

A. ₦560,500

Correct B. ₦535,500

C. ₦535,000

D. ₦525,000

Correct Answer: B

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Question 9 View Details

A customer deposits ₦200,000 in a bank that offers a nominal annual interest rate of 12 % compounded quarterly. After 2 years the customer withdraws half of the amount in the account and leaves the remainder for another 3 years under the same terms. How much money will the customer have at the end of the 5‑year period? (Round to the nearest naira.)

A. ₦176,795

Correct B. ₦180,611

C. ₦270,915

D. ₦361,221

Correct Answer: B

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Question 10 View Details

A trader buys 100 units of a product at ₦2,500 each. He also incurs a transport charge of ₦15,000 and an insurance charge of ₦5,000 for the shipment. He sells each unit at ₦3,500. What is the total profit earned by the trader?

A. ₦70,000

B. ₦85,000

C. ₦90,000

Correct D. ₦80,000

Correct Answer: D

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Question 11 View Details

A customer deposits ₦100,000 in a bank that offers a nominal interest rate of 8% per annum compounded quarterly. After 2 years the bank changes the nominal rate to 9% per annum compounded semi‑annually for the next 3 years. What is the total amount in the account at the end of the 5‑year period? (Round to the nearest naira.)

Correct A. ₦152,581

B. ₦151,000

C. ₦149,632

D. ₦155,210

Correct Answer: A

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Question 12 View Details

A firm needs ₦5,000,000 for expansion. It can either (i) obtain a bank loan at 12% simple interest per annum, with interest expense giving a tax shield at a 30% corporate tax rate, or (ii) issue ordinary shares at a issue price of ₦1,200 each, paying a dividend of 15% of the nominal value (₦1,000) per share each year. Which source of finance will result in the lower annual cost to the firm after tax?

A. Retained earnings

B. Ordinary shares

C. Preferred shares

Correct D. Bank loan

Correct Answer: D

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Question 13 View Details

A retailer buys a batch of 500 units of a product at ₦5,000 each. He adds a markup of 30% on cost to set the list price. For purchases of 10 units or more, he gives a discount of 12% on the list price. The retailer also incurs fixed monthly overheads of ₦150,000. What is the minimum number of units that must be sold in a month to achieve a profit of at least ₦200,000?

A. 450 units

Correct B. 487 units

C. 500 units

D. 480 units

Correct Answer: B

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Question 14 View Details

A wholesaler purchases goods from a manufacturer at ₦8 per unit. He sells to retailers by quoting a list price L per unit. Retailers receive a trade discount of 5% on L, and the wholesaler pays a commission of 2% of the selling price (after discount) to his sales agents. The wholesaler wants a profit margin of 20% on his cost after accounting for the discount and commission. What should be the list price L (in naira, to two decimal places)?

Correct A. ₦10.31

B. ₦9.85

C. ₦11.00

D. ₦10.75

Correct Answer: A

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Question 15 View Details

A company stores a product in a warehouse. Annual demand for the product is 12,000 units. The ordering cost per order is ₦5,000. Holding cost is 25% of the unit cost per year, and the unit cost is ₦800. The warehouse can hold at most 2,500 units at any time. Because demand varies, the company wants to keep a safety stock equal to 10% of the order quantity. Determine the optimal order quantity that minimises the total annual cost (ordering + holding + purchase) while respecting the warehouse capacity, and state the resulting total annual cost (rounded to the nearest naira).

A. Optimal order quantity = 650 units; Total annual cost = ₦9,812,340

Correct B. Optimal order quantity = 708 units; Total annual cost = ₦9,769,706

C. Optimal order quantity = 800 units; Total annual cost = ₦9,880,450

D. Optimal order quantity = 750 units; Total annual cost = ₦9,735,120

Correct Answer: B

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Question 16 View Details

Three partners A, B and C form a partnership. Their capital contributions are ₦120,000, ₦80,000 and ₦100,000 respectively. They also work different numbers of hours in the business: A works 150 hours, B works 90 hours and C works 60 hours. The profit‑sharing agreement states that profit is divided 60 % on the basis of capital contribution and 40 % on the basis of labour contribution. If the total profit for the year is ₦96,000, how much profit does partner B receive?

A. 25600

B. 28800

C. 32640

Correct D. 26880

Correct Answer: D

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Question 17 View Details

An importer purchases goods on FOB terms for $50,000. Shipping costs $2,000 and insurance is $500. Import duty is charged at 12 % of the CIF value (CIF = cost + insurance + freight). After duty, a customs clearance fee equal to 2 % of the duty amount is payable. The importer also pays a bank commission of 1.5 % on the total amount paid (including duty and clearance). If the shipment contains 5,000 identical units, what is the effective cost per unit in dollars (rounded to two decimal places)?

A. 11.90

B. 11.79

Correct C. 11.96

D. 11.94

Correct Answer: C

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Question 18 View Details

An investor buys shares of XYZ Ltd on three occasions during the year: - 1 Jan: 200 shares at ₦150 each; - 15 Mar: 150 shares at ₦165 each; - 30 Jun: 250 shares at ₦158 each. On 31 Dec the investor sells 400 shares at ₦170 each. Assuming the shares sold are taken from the earliest purchases (FIFO), and that a dividend of ₦2 per share is paid for every share held on 31 Dec (including the sold shares), determine: (a) the net profit (including dividend) for the year in naira, and (b) the profit expressed as a percentage of the total amount invested (rounded to two decimal places).

Correct A. Profit: ₦5,750; Percentage: 6.10%

B. Profit: ₦6,550; Percentage: 6.95%

C. Profit: ₦5,567; Percentage: 5.91%

D. Profit: ₦5,350; Percentage: 5.68%

Correct Answer: A

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Question 19 View Details

What is the term for a person who buys goods in bulk from manufacturers and sells them to retailers?

Correct A. wholesaler

B. retailer

C. broker

D. distributor

Correct Answer: A

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Question 20 View Details

The Nigerian Stock Exchange All‑Share Index (ASI) is currently at 12,500 points. A particular company's share price is 0.8 % of the index value. The company's dividend yield is 4.5 % and its price‑earnings (P/E) ratio is 15. Determine the company's earnings per share (EPS) and dividend per share (DPS) in naira, each rounded to two decimal places.

A. EPS = 6.67 Naira; DPS = 0.30 Naira

Correct B. EPS = 6.67 Naira; DPS = 4.50 Naira

C. EPS = 66.67 Naira; DPS = 4.50 Naira

D. EPS = 666.67 Naira; DPS = 450.00 Naira

Correct Answer: B

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Question 21 View Details

A company plans an advertising campaign using TV and newspaper ads. Each TV ad costs ₦120,000 and reaches 400,000 viewers. Each newspaper ad costs ₦20,000 and reaches 50,000 readers. The total advertising budget cannot exceed ₦350,000 and the campaign must reach at least 1,000,000 people. At most two TV ads may be aired. What is the minimum number of newspaper ads required to satisfy both the budget and reach constraints?

Correct A. 4

B. 6

C. 3

D. 5

Correct Answer: A

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Question 22 View Details

The list price of a batch of goods is ₦500,000. The trader receives a trade discount of 10% and, if he pays within 15 days, a further cash discount of 2% on the balance after the trade discount. What cash price must the trader pay?

A. 452000

Correct B. 441000

C. 440000

D. 449000

Correct Answer: B

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Question 23 View Details

A fire‑insurance policy is taken out on a building valued at ₦12,000,000. The basic premium rate is 0.25% of the insured value. Because the building is in a high‑risk area, a loading of 15% is added to the basic premium. A government tax of 5% is then applied to the loaded premium. The client negotiates a discount of 10% on the total amount after tax. What is the final amount the client must pay?

Correct A. 32603

B. 34500

C. 31603

D. 33075

Correct Answer: A

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Question 24 View Details

A retailer sells a product for ₦2,500 per unit. Variable cost per unit is ₦1,500 and fixed overheads (excluding advertising) are ₦1,500,000 per month. The retailer plans an advertising campaign. Market research shows that each ₦1,000 spent on advertising generates an additional 30 units sold. Advertising can be undertaken in multiples of ₦1,000. What is the minimum advertising expenditure (in thousands of naira) required for the retailer to achieve a profit of at least ₦200,000 for the month, and how many units will be sold at that advertising level?

A. Advertising expenditure: 21000 naira; Units sold: 1830

B. Advertising expenditure: 24000 naira; Units sold: 1920

Correct C. Advertising expenditure: 18000 naira; Units sold: 1740

D. Advertising expenditure: 15000 naira; Units sold: 1650

Correct Answer: C

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Question 25 View Details

A business's cash book shows a closing balance of ₦1,250,000. The bank statement for the same period shows a balance of ₦1,300,000. The following items must be considered:\n- Outstanding checks: ₦10,000.\n- Deposits in transit: ₦20,000.\n- Bank service charges of ₦5,000 (already recorded in the cash book).\n- A direct debit of ₦12,000 not yet recorded in the cash book.\n- An error where a cheque of ₦8,000 was entered as ₦80,000 in the cash book.\nDetermine the corrected cash book balance after all adjustments.

A. 1334000

B. 1238000

Correct C. 1310000

D. 1166000

Correct Answer: C

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