Musharaka with losses Assume the following: _ A company is importing and selling Mercedes cars. _ An Islamic bank invests US$8 million for an 80% profit share._ An investor invests US$2 million for a 20% profit share. _ The investor is to be paid a 10% management fee as percentage of profit after expenses. Assume: Sale proceeds = US$9,200,000 Expenses = US$200,000 Calculate: 1: The total return to the bank: 7,200,000 2.The total return to the investor: 1,800,000  show how they receive the numbers: image is attached for instructions:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Musharaka with losses

Assume the following:

_ A company is importing and selling Mercedes cars.

_ An Islamic bank invests US$8 million for an 80% profit share._ An investor invests US$2 million for a 20% profit share.

_ The investor is to be paid a 10% management fee as percentage of profit after expenses.

Assume:

Sale proceeds = US$9,200,000

Expenses = US$200,000

Calculate:

1: The total return to the bank: 7,200,000

2.The total return to the investor: 1,800,000 

show how they receive the numbers: image is attached for instructions: 

 

 

Sale proceeds
Less expenses
Capital loss
9,200,000
200,000
800,000
Total loss
1,000,000
No profits and so no management fees
Net loss of 1,000,000 shared by bank and client in ratio of 80/20%
Total capital returned to the bank
7,200,000
Total capital returned to the investor
1,800,000
Note under Musharaka, losses are shared between bank and
investor
Transcribed Image Text:Sale proceeds Less expenses Capital loss 9,200,000 200,000 800,000 Total loss 1,000,000 No profits and so no management fees Net loss of 1,000,000 shared by bank and client in ratio of 80/20% Total capital returned to the bank 7,200,000 Total capital returned to the investor 1,800,000 Note under Musharaka, losses are shared between bank and investor
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