Question

7.
actual capital employed
The Goodwill of firm 3,60,000 valued at three year's purchase of super
profit. If capital employed is 4,00,000 and Normal rate of return is 10% per
annum, the amount of average profit will be
the time of

Answer 1

Answer:

200000

Explanation:

Step 1: Calculation of Normal Profit:

Normal Profit= Capital employed * [ Normal rate of return/100]

= 200000* [10/100]

= 20000

Step 2: Calculation of Actual Profit:

Actual Profit= 36000-6000

= 30000

Step 3: Calculation of Super Profit:

Super Profit= Actual profit- Normal Profit

= 30000- 20000

=10000

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Step 4: Calculation of Goodwill:

Goodwill= 10000* 2

= 20000