Question

Ramesh runs an automobile repairs shop from rented premises.He pays a rent of Rs.15000 per month.Besides having the usual number of workers.since Ramesh does not have technical expertise.he employs a supervisor, having the necessary technical knowledge, at a salary of Rs.12000 per month.Ramesh made a profit of Rs.6, 50,000 before taxes for the year ended 31 st march, 2009 on which date his net assets were worth rs.30 lakhs. The owner of the premises is keen to get it back from Ramesh to enable his son.who has trained himself to be an automobile engineer, to carry on business.Ramesh is not interested merely vacating the premises;he is, however, wiling to sell the business on an on-going basis provided he is paid a fair compensation. The premises are worth Rs.5 lakhs. If 15% were to be a reasonable return on capital employed in this line of business, how much goodwill can Ramesh expect on the basis of 3 years purchase of super profit​

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