Question

# Calculate the monthly payment plan for Home purchase on the basis of Diminishing Musharakah (Shirkatul Maal): • Price of House: Rs 2. 0 Million Bank Financing: 80 % (Full payment is made in one tranche) • Tenure: 10 Years Rental (Return r

D M - Home Exercise - Purchase Finance by an Islamic bank

Calculate the monthly payment plan for Home purchase on the basis of Diminishing Musharakah (Shirkatul Maal):

Price of House: Rs         2. 0 Million
Bank Financing:             80 % (Full payment is made in one tranche)

Tenure:             10 Years
Rental (Return rate equivalent to) :           12% p.a. (of investment)

Bank’s Share:  Rs. 1600000

Client’s Share: Rs. 400000

No of Bank’s Units: 120 (equals to number of Months)

Price per Unit: Rs.          13,333.33

Rent per Unit: Rs. 1600

[(outstanding investment * rate) / 12 / No. of outstanding units]

 Month Unit Price Rent per month Total Monthly Payment Units balance Investment Balance 0 - - - 120 1,600,000 1 13,333.33 16000 29333.33 119 1,586,666.66 2 13,333.33 15866.66 29199.99 118 1,573,333.33 3 13,333.33 15733.33 29066.6633 117 1,560,000 4 13,333.33 15600 28933.33 116 1,546,666.66 5 13,333.33 15466.66 28799.99 115 1,533,333.33 6 to 115 xxxx xxxx xxxx xxxx xxxx 116 13,333.33 666.66 13999.99 4 53333.33 117 13,333.33 533.33 13866.66 3 39999.99 118 13,333.33 399.99 13733.32 2 26666.66 119 13,333.33 266.66 13599.99 1 13333.33 120 13,333.33 133.33 13466.66 - 0.00

Bank’s Share:  Rs. 1600000

Client’s Share: Rs. 400000

No of Bank’s Units: 120 (equals to number of Months)

Price per Unit: Rs.          13,333.33

Rent per Unit: Rs. 1600

[(outstanding investment * rate) / 12 / No. of outstanding units]

 Month Unit Price Rent per month Total Monthly Payment Units balance Investment Balance 0 - - - 120 1,600,000 1 13,333.33 16000 29333.33 119 1,586,666.66 2 13,333.33 15866.66 29199.99 118 1,573,333.33 3 13,333.33 15733.33 29066.6633 117 1,560,000 4 13,333.33 15600 28933.33 116 1,546,666.66 5 13,333.33 15466.66 28799.99 115 1,533,333.33 6 to 115 xxxx xxxx xxxx xxxx xxxx 116 13,333.33 666.66 13999.99 4 53333.33 117 13,333.33 533.33 13866.66 3 39999.99 118 13,333.33 399.99 13733.32 2 26666.66 119 13,333.33 266.66 13599.99 1 13333.33 120 13,333.33 133.33 13466.66 - 0.00

source: from classroom

Bank’s Share:  Rs. 1600000

Client’s Share: Rs. 400000

No of Bank’s Units: 120 (equals to number of Months)

Price per Unit: Rs.          13,333.33

Rent per Unit: Rs. 1600

[(outstanding investment * rate) / 12 / No. of outstanding units]

 Month Unit Price Rent per month Total Monthly Payment Units balance Investment Balance 0 - - - 120 1,600,000 1 13,333.33 16000 29333.33 119 1,586,666.66 2 13,333.33 15866.66 29199.99 118 1,573,333.33 3 13,333.33 15733.33 29066.6633 117 1,560,000 4 13,333.33 15600 28933.33 116 1,546,666.66 5 13,333.33 15466.66 28799.99 115 1,533,333.33 6 to 115 xxxx xxxx xxxx xxxx xxxx 116 13,333.33 666.66 13999.99 4 53333.33 117 13,333.33 533.33 13866.66 3 39999.99 118 13,333.33 399.99 13733.32 2 26666.66 119 13,333.33 266.66 13599.99 1 13333.33 120 13,333.33 133.33 13466.66 - 0.00

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