Scribd
Upload
90 views5 pages

MBA Islamic Finance Exercises

This document contains 4 exercises summarizing ijarah (lease) financing arrangements. Each exercise calculates financial metrics like annual profit, total return, and average annual return over a 5 year period for vehicles leased at different rental amounts. For example, Exercise 1 shows a total profit of $390000 and an average annual return of 11.14%.

Uploaded by

M ShahZeb Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
90 views5 pages

MBA Islamic Finance Exercises

This document contains 4 exercises summarizing ijarah (lease) financing arrangements. Each exercise calculates financial metrics like annual profit, total return, and average annual return over a 5 year period for vehicles leased at different rental amounts. For example, Exercise 1 shows a total profit of $390000 and an average annual return of 11.14%.

Uploaded by

M ShahZeb Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Islamic Finance Theory and Practices

Assignment
Ijarah Financing

Muhammad Shahzeb Khan


01-222191-012

Submitted to: Khalid Hussain


MBA- 2 (Evening)
1.
Exercise 1
years 5
price of car 1000000
Installments 300000
lease rental Payment 1500000

DISCRIPTION DISCRIPTION
Investment 1000000 lease Rental 1500000
installment -300000 Depreciation -1000000
Net Installment -700000 Gain on sale 500000
cash inflow 1200000 Insurance -110000
Net Cash Inflow 500000 Total profit 390000

A Average Total Profit


390000/5 78000

B Total Return

total Profit/net 390000/7000


investment 00
55.71%
Average Annual Return
Total 55.71/5
return/years
11.14%
2)
Exercise 2
Years 5

A Lease Rental Payable Every Year


(240000*5+250000) /5

290000

B Average Annual Profit


Lease Rental 290000*5 1450000
-1000000
Gain on Sale 450000
Insurance -110000
total Profit 340000

Average Annual Profit 340000/5 68000

C Total Return

Investment 1000000
Ist installment -290000
Net Investment 710000

Total Annual Return


total profit/net 47.89%
investment

Average Annual Return


47.89%/5 9.58%
3)
Exercise 3

A Monthly installment 300000/12 25000


Lease Rentals 1500000-25000 1475000
cost of Asset -1000000
Remaining Amount 475000
Insurance -110000
Total Loss -10000
Total Profit 355000
Average Annual Profit 71000 71000

B Percentage Return on Investment


Asset Cost 1000000
Fisrt Installment -300000
Net Investment 700000

Total Return Total Profit/Net 355000/700000


investment

50.71%

Average Annual Return 50.71%/5 10.14%

C Amount Of Penalty

300000*0.03 9000
300000*0.03 9000
18000
4)
Exercise 4

A Rental Per year (300000*12)+500000/5 460000


Rental Per Month 460000/12 38333.33

B 460000*5 2300000
2300000-3833.33 2261666.667
Insurance 18000*5 -90000
Actual Loss 50000-45000 -5000
Cost of Asset -1500000
Total Profit 666666.7

C Net Profit (-666666.7/5) 133333.3

D Average Return Per Year


1500000
-460000

1040000

Net Return (133333.3/1454000)


64.10%
Average Return Per Year

64.10%/5 12.82%

You might also like