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Mr Naeem approaches different Islamic banks to apply for financing under the concept of Murabha. He wants to buy a Cooling system for his factory.

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Mr Naeem approaches different Islamic banks to apply for financing under the concept of Murabha. He wants to buy a Cooling system for his factory. He cannot make the cash payment to buy the cooling system. Let us say that the purchase price for the machine is 27000 BHD. Bank A offers financing at the profit rate the bank wants to charge is 5%. The period of financing is 6 months. Akram is willing to make a lump sum payment upon expiry of 6 months. Bank B offers financing at the profit rate the bank wants to charge is 9%. The period of financing is 3 months. Akram is willing to make a lump sum payment upon expiry of 3 months. compare the selling price and total profit for both banks where should Mr Naeem finance his cooling machine

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