Question

Calculate the value of good 1. Sri Ratanmani has invested a sum of * 2,00,000 in his own business which is a very profitable The annual profit earned from his business is 45,000 which includes a sum of 10,000 received compensation for acquisition of a part of his business premises. As an alternative to his engagement in his business, he could have invested the money in long-term deposit with the bank earning a normal rate of interest of 10% and also could engage himself in employment thereby getting an annual salary income of 37,200. Considering 2% as fair compensation for the risk involved in the business, calculate the value of goodwill of his business on capitalisation of super profits at the normal rate of interest. Ignore taxation.
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Answer 1

Explanation:

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