Question $02$

Assume Mr$.$ Ronaldo enters into a Housing Finance with an Islamic Bank under Diminishing Musharaka Contract. The total value of the house id OMR $1000000$ where Mr$.$ Messi provides $30\%$ down payment and the balance $70\%$ is invested by the bank. Rental value of OMR $10000$ per year is agreed by both parties. The bank's investment of OMR $700000$ will be bought by the Mr$.$ Messi in $10$ years in $10$ equal instalments.

a$)$ Explain what is diminishing Musharaka contract based on a home financing product and how it differs from the conventional home financing product $(8$ marks$)$

b$)$ Calculate the annual payment Ronaldo will be paying to the Bank in each of the first three years. The value should show the share of rent and capital repayment separately.

$(12$ marks$)$

$($Total $20$ Marks$)$

$\backslash$table$[[$Year$,\backslash$table$[[$Rent payment to$],[$bank by Sultan pultan pays $30\%],[(0$:IR$)]],\backslash$table$[[$Total payment to$],[$purchase price of the$],[$houseto bank $(0$IR$)],[$bank $(0$IR$)]],\backslash$table$[[$Ownership of$],[$bank$]],\backslash$table$[[$Ownership of$],[$Sultan$]],],[$Start of contract,,,,,$],[$End of year $!,,,,,.],[$End of year $2,,,,,],[$End of year $3,,,,,]]$