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16. Chepkurui imports rice from the United States at an initial cost of 500US Dollars per tonne. He then

pays 20% of this amount as shipping costs and 10% of the same amount as custom duty. When the
rice reaches Mombasa he has to pay 5% of the initial cost to transport it to Nairobi.
(a) Given that on the day of this transaction the exchange rate was IUS Dollar = Ksh 76.60, calculate
the total cost of importing one tonne of rice up to Nairobi in Kenya shilings​

1 Answer

3 votes

Answer:

The total cost of importing a tonne of rice up to Nairobi was 51,705 Kenya Shilings.

Explanation:

Since Chepkurui imports rice from the United States at an initial cost of 500 US Dollars per tonne, and he then pays 20% of this amount as shipping costs and 10% of the same amount as custom duty, and when the rice reaches Mombasa he has to pay 5% of the initial cost to transport it to Nairobi, given that on the day of this transaction the exchange rate was 1 US Dollar = Ksh 76.60, to calculate the total cost of importing one tonne of rice up to Nairobi in Kenya shilings the following calculation must be performed:

(500 + (500x0.2) + (500x0.1) + (500x0.05)) x 76.60 = X

(500 + 100 + 50 + 25) x 76.60 = X

675 x 76.60 = X

51.705 = X

Therefore, the total cost of importing a tonne of rice up to Nairobi was 51,705 Kenya Shilings.

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