Question

If Goodwill is Rs. 1,20,000, average profit is Rs. 60,000 normal rate of return is 10% on capital employed Rs. 4,80,000. Calculate capitalised value of the firm

Answer 1

Answer:

Explanation :

Goodwill = Capitalized value of firm - Capital employed

1,20,000 = Capitalized value of firm - 4,80,000

Hence Capitalized value of firm = 1,20,000 + 4,80,000 = Rs 6,00,000