Business Studies, asked by acchu5066, 11 months ago

How to calculate goodwill by annuity method?

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Answered by Anonymous

Answer:

Under this method, goodwill is calculated by taking average super profit as the value of an annuity over a certain number of years. The present value of this annuity is computed by discounting at the given rate of interest (normal rate of return). This discounted present value of the annuity is the value of goodwill.

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