Waec Model Questions Vol1 2022 Commerce Question 44
Practice objective / multiple choice question 44 from the 2022 Waec Model Questions Vol1 Commerce examination.
A company borrows $50,000 from a foreign bank at a simple annual interest rate of 6%, payable at the end of 3 years. The bank also charges a one‑time loan arrangement fee of 1% of the loan amount, payable in dollars. The prevailing spot exchange rate is ₦410 per $. To hedge the foreign‑currency exposure, the company enters a forward contract to sell the dollars at a forward rate of ₦425 per $. Determine (a) the total amount in naira the company will have to pay at maturity, and (b) the effective annual interest rate expressed in naira terms, taking the fee and the forward contract into account.
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About This Question
This is Waec Model Questions Vol1 2022 Commerce Question 44. It is one of the objective questions from the 2022 Waec Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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