It says in many sources (Hadiths, Quran) that Muhammad PBUH is the last prophet.
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Hi Son of Adam:
I think Muslims generally read Hadithes and verses of Quran too quickly. I mean the verses and Hadithes must be pondered on, and carefully analyzed "within its context"
That Muhammad said "I am the last Prophet" was not for the purpose of interpreting the verse of Quran That says Muhammad is the Seal of Prophets, and was not related to explaination of the verse of Quran.
If you are familiar with Arabic (are you???), you would know the word "Khatam" which is translated as "seal" was a stone on rings, that was used both as ornament and also to seal (stamp) a document to confirm it.
The Seal of Prophets, in our view, means ornament of Prophets. Another interpretation might be a Prophet who confirmes previous Prophet and was an ornament of the Prophets.
If God wanted to say, there will never be another Prophet after Muhammad, He could say that very clearly. Why leave it to interpretations and doubts?
If you read those Hadithes that Muhammad said He is the last Prophet carefully with an open mind, then analyz them carefully, you will see that Muhammad said "there is no prophet after ME" in its context is related to the fact that Muhammad was explaining that, for example, after Moses and before Jesus, there came a number of Prophets, such as David and Solomon who promoted Jewish Faith. So, Muhammad said after Him, there would be no prophets within Islamic dispensation, but only Khalifs come.
So, in Baha'i View He did not say, no more Prophets forever. He meant no more prophets who come to promote Islam, but only Khalifs come.
Then there is a Hadith that Muhammad said, He was like the last brick of a buidling of Prophets. and this building is built, and He was the Last brick.
The Human Civilization has been created by successive Revelations from God. That means, God has been sending Prophets to guide humanity, until we have come to this level and advancement.
In a Religious term, there was a Cycle that started with Adam and ended with Muhammad. and Muhammad was the Last Prophet in that cycle. This was the first creation of God which took 6000 years.
But the creation of God continues through a new cycle. The second creation starts with the Baha'i Revealtion.
So, yes, Muhammad was that last brick of that Building, but that building is not the last creation of God. (We cannot put a limit on creation and creativity of God)
So, dear Son of Adam,
Let us not forget either the verses that speak of Messengers to come:
"O children of Adam! there shall come to you Apostles from among yourselves, rehearsing my signs to you; and whoso shall fear God and do good works, no fear shall be upon them, neither shall they be put to grief." Quran 7:35
al-A`raf 7:35
This Translation is from Rodwell.