QUESTION 1 1.1 Briefly describe the concept of Al Rahn Financing and how the con

Question

QUESTION 1 1.1 Briefly describe the concept of Al Rahn Financing and how the concept differs from conventional pawn broking (5 marks) Value of Gold Margin of Advance Per Month RM 100 RM 100 58 % 76 % 87 % RM 0.69 RM 0. 71 RM 0.8 RM 100 1.2 Puan Saodah is a petty trader at a wet market in Kuala Teregganu. She applies RM2,500 financing for 8 months period to keep her stock. The Gold value that she has in possession amounted to RM 7,750 and the bank grants 76% margin of advance. Compute the following:- (i) How much is the fees payable? (ii) Total redemption that she has to pay at the end of seven months

Explanation / Answer

(i)

Fees for the one month = Gold value * Fees per RM100 at 76% / 100 = 7750 * 0.71 / 100 = RM 55.025

Fees payable at the end of 8 months advance = RM 55.025 * 8 = RM 440.20

(ii)

Amount has to be paid at the end of 7 months on redeemption = Advance + Fees payable for 7 months

= RM 2500 +  RM 55.025 * 7 = RM 2885.175

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