Samad is a sole trader who owns a bicycle shop in Shah Alam. The shop sells bicycles and cycling accessories. Samad wants to expand his business by offering repair services to customers. Samad will need to rent a workshop and buy some equipment for the repair service. Samad estimates that he will need RM10,000 to rent, fit and equip the workshop and further RM5,000 to buy inventories. Samad is considering asking his bank for a loan. Samad’s cousin, Kamal, has offered to go into partnership with Samad. Kamal would invest RM10,000 in the business. Kamal is a car mechanic.

(a) Explain THREE (3) external sources of finance, other than a bank loan, that Samad might consider for raising all or part of the RM15,000 needed to
finance the expansion of his business. (15 marks)

(b) Do you think Samad should go into partnership with his cousin, Kamal? Justify your answer. (10 marks)

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a Three external sources of finance that Samad might consider for raising all or part of the RM15000 ... View the full answer