Question

particulars, calculate the value of goodwill
(i) Average capital employed is * 7,20,000.
(ii) Normal rate of return is 10%.
(iii) No. of years over which super profit is to be paid is 3.
(iv) Average profit is 98,620.
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Answer 1

Answer:

Normal Profit = 7,20,000*10%=72000

Super Profit = Average Profit - Normal Profit

= 98,620 - 72,000 = 26,620

Goodwill = 26,620*3= 79,860