Mohammed needs money in order to buy a latest Villa. The cost of building the Villa is BHD 75,000. His wife, Mariam, has savings up to BHD 20,000 and needs additional financing of BHD 55,000. Mohammed knows that he can always borrow from any bank in Bahrain but he wants a Shariah compliant financing. And he aware about the basic conditions for the validity of sale is that the commodity must be in existence, seller must own commodity and the seller must have physical possession of commodity and Mohamed is not aware about the exceptional product in Islamic Banking so Mohammed seeks your advice on a number of issues before he can make his decision on which financing best suit his needs i.e

Q 1: MURABAHA CONTRACT (5*2MARKS EACH =10MARKS) One of Mohameds Islamic contracts alternative is to sign murabaha contract so discuse how Murabaha differs from conventional bank lending. Answer the following questions for both a conventional bank loan and Murabaha. (Critically analyze the following questions) a. Examine the key areas of concern of conventional bank loan and Murabaha in todays banking system. b. How would you categorize the bankcustomer relationship in conventional bank loan and Murabaha? c. Are the returns fixed or variable in both? d. Are there any guarantees in conventional bank loan and Murabaha? e. What happens if the borrower defaults?

Q2: Mrabahr Price (5 MARKS) If the the bank sets the profit margin rate per annum, 5%. and the financing period = 10 years. Then, determin the selling price

Q3: MUSHARAKA CONTRACT (10 MARKS) Explain how can Mohamed finance his house through diminishing musharaka In your discussion mention what is the Cost of house and whats the Bank financing percenage Tenure: 10 years Rental (return rate equivalent to) : 7.3% p.a. (of investment) apply the best approach to calculate the monthly payment plan for the home purchase

Q4: IJARA CONTRACT (5 MARKS) Explain how can Mohamed finance his house through Ijara contract If Mohamed requests financing the house on a 15-year lease from the bank. The bank buys the assets and leases them for 15 years. with a Rate of profit = 10% flat/ annum Use proper method to find the yearly Ijara rental the bank will charge in order to cover the costs and to make the required profit?