A Theory of Optimal Investment Decision in an Islamic Economy
Paper presented to the International Seminar on Islamic Economics for‘University Teachers organised by the I.I.I.E in August-September 1987. Presents non-equity participation (NEP) model based on mudaraba. Also gives an alternative for it. Discusses the concept of investment criteria and proposes to adopt internal rate of return as a valid criterion, provided it uses expected rate of return to calculate NVP. On the question of opportunity cost of money, concludes that money has no opportunity cost as such. However, once transformed into physical resources it does have. But then it is not money any more. Mathematical. Uses diagrams. For economists. Documented.