Neco 2024 Islamic Religious Studies Question 6

An Islamic micro‑finance institution (IMFI) offers a mudarabah partnership where the capital provider contributes \(N100{,}000\). The profit‑sharing agreement states that the entrepreneur receives \(40\%\) of any profit, the capital provider \(60\%\), provided the annual profit does not exceed \(20\%\) of the capital. If the profit exceeds \(20\%\), the excess is deemed riba and must be returned to the capital provider, nullifying the entrepreneur's share for that excess. In a particular year the venture generated a total profit of \(N28{,}000\).\n\n(a) Determine the amount of profit that is permissible under the agreement.\n(b) Calculate the entrepreneur's share of the permissible profit.\n(c) State whether the transaction as a whole complies with the Islamic principle prohibiting riba.