Mr$.$ Abdou wants to buy a penthouse in Rome priced at GBP $500,000.$ Mr$.$ Abdou puts a down$-$payment of $20\%($GBP $100,000)$ and finances the remaining $80\%($GBP $400,000)$ using the Bai Bithaman Ajil $($deferred payment sale$)$ or $($BBA method$).$ Assume that the Annual Profit Rate $($APR$)$ charged by the Islamic bank in Rome is $10\%$ per annum and the duration of financing is $30$ years. The Islamic bank would first buy the penthouse for GBP $400,000$ and then sell the house to Mr$.$ Abdou at a profit, with deferred payments over the $30-$years period.

a$.$ Draw a timeline that depicts the duration and transactions of house financing above,

b$.$ Find monthly payment or monthly instalment $!$

c$.$ What is the total payment made by Mr$.$ Abdou over $30$ years $?$

d$.$ What is the total profit made by the Islamic bank under BBA financing $?$

Answer rating: 100% (QA)

Here are the calculations a Timeline of transactions Year 0 Mr Abdou pay... View the full answer