4: Application (10 Marks). Multi-Period Mudharabah Financing 1. Company (A) has entered into a mudharabah contract with Islamic Bank in which the company provides monetary capital of $4,000,000 to be managed and invested by the Bank. 2. The Bank provides Mudharabah Al-Muqayadah investment account facility whereby the Bank will invest in a specific project as agreed Page 12 by the client. For this project there is another investor, Company B who had agreed to invest $2,000,000. 3. The profit sharing between three of them is 4:2:2 for Company A, Company B and the Bank respectively. 4. The Bank then entered into another mudharabah contract (Re- Mudharabah) with Company C to undertake a housing development project and they had agreed on the profit sharing ratio of 70:30 (Bank: Company C). 5. The Bank had agreed to contribute the $6,000,000 as monetary capital based on a five-year mudharabah financing contract (mudharabah muqayaddah). Assume the following results of the venture: Year Profit/ (Loss) Year 1 $ (500,000) Year 2 $1,000,000 Year 3 $3,000,000 Year 4 $ 1,500,000 Year 5 $2,000,000 Required: Determine the profit/loss of the above transactions. Show how profit/loss will be allocated for all parties involved based on: 1. Each Period method