Multilateral Mudaraba:

Company A entered into a Mudaraba contract with Bank Sharia in which the company provides monetary capital of $2,000,000 to be managed and invested by the Bank. The Bank provides Mudaraba Al-Muqayadda investment account facility whereby the Bank will invest in a specific project as agreed by the client.

For this project there is another investor, Company B who had agreed to invest $2,000,000. The profit and loss sharing between three of them is in the ratio of 2: 2: 1 for Company A, Company B and the Bank respectively.

The Bank then entered into another Mudaraba contract (Re-Mudaraba) with Company X to undertake a housing development project and they had agreed on the profit-sharing ratio of 75: 25 (Bank: Company X).

Requirement:

Determine the profit or loss to be shared at the end of the contract by the four parties involved above if:

• Profit $1,600,000; or
• Loss $450,000.