Question

if the capital of a firm is 500000 and profit for 2019 is rs 40000 what will be super profit if rate of return is 7 on capital employed ​

Answer 1

Answer:

just put in the formula then we get the answer

Answer 2

Given:

• The capital of a firm is Rs 5,00,000.
• The profit for 2019 is Rs 40,000.
• NRR is 7%.

To find: The super profit.

Answer:

Super profit = Average profit - Normal profit

Average profit = Total profit ÷ Number of years

Since the profit only for one year is given, that year's profit will be considered as the average profit. Hence, the average profit is Rs 40,000.

Normal profit = Capital employed × (NRR ÷ 100)

• Capital employed = Rs 5,00,000
• NRR [Normal Rate of Return] = 7%

Normal profit = Rs 5,00,000 × (7 ÷ 100) = Rs 35,000

• Average profit = Rs 40,000
• Normal profit = Rs 35,000

Super profit = Rs 40,000 - Rs 35,000 = Rs 5,000

Therefore, the super profit of the firm = Rs 5,000.