10. Musharakah Project Financing 10.1 Sudanese Bank enters a joint venture agreement with a group of farmers for agricultural production with RM 300,000 investment cost with the following terms and conditions:- Bank Farners Capital 70% 30% Profit Sharing 60 % 40% It was agreed that the farmers would get 10% management fee based on profit of transaction. It was also agreed that total expenses be deducted before the profit is distributed. Based on the following assumptions: - (1) (ii) Sales proceeds RM 900,000 Total expenses incurred RM 250,000 Calculate for the followings: (iii) Profit due to both parties at the end of the transaction. (iv)' Will the customer be entitled to management fee? If so what is the amount due to him? What is the percentage of retum on capital invested? (v) 10.2) Project Financing under Musyarakah concept. (Importation of Cars) 1) Bank Setia made a joint venture agreement with Syarikat Berjaya Sdn. Berhad to import & Special Edition BMW with a capital outlay of RM 4 mil 2) It was agreed by both parties that their capital and prot-sharing contribution were 70:30 (Bank: Customer) and 60:40 (Bank: Customer) respectively 3) The estimated cost for importing the cars was RM 4,125,000 4) Prior to the conimencement of this project the RM 4 mil was invested generating return of RM 80,000 5) It was agreed that the customer would be responsible for importing the vehicles and clearance from the port and will be paid 18% management fee based on profit of transaction. 6) In addition, it was also agreed that total expenses be deducted before the profit is distributed. Part 1 - Based on the following assumptions: - (a). Sales proceeds RM 6 mil (b) Total expenses incurred 5% of the estimated cost of importation Calculate for the following:- Profit due to both parties at the end of the transaction? Will the customer be entitled to management fee? If so what is the amount due to him? (ii) What is the return on capital invested? Part 2 Suppose the proceed were only RM 3 million, compute the amount of loss to be shared between the bank and the customer? Can they recover their initial investment