Profits of B Ltd. for the last 4 years respectively are : 15,000, 25,000, 30,000, and 40,000 . Average capital employed in the business is 2,00,000 . Fair rate of return is 10% . It is expected that the company will be able to maintain it's super profit for the next four years. calculate goodwill according after taking present valued of one rupeefor 4 years@ 10% is ₹2.50
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Explanation:
Total profit = 15,000+ 25,000+ 30,000+ 40,000/4
1,10,000/4= 55,000
Normal profit= capital employed × Normal rate of return/100
2,00,000× 10/100
= 20,000
Super profit= Average profit - Normal profit
55,000- 20,000
= 35,000
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