The capital employed by a firm is 600000. The annual profit of the firm is 120000 including 19200 received as compensation. The money could be invested in the bank 5 years@ 10% per annum. Considering 2% as fair compensation for the risk involved in the firm. Compute the value of goodwill on the basis of 3 years purchase of super profit.
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The capital employed by a firm is 600000. The annual profit of the firm is 120000 including 19200 received as compensation. The money could be invested in the bank 5 years@ 10% per annum. Considering 2% as fair compensation for the risk involved in the firm. Compute the value of goodwill on the basis of 3 years purchase of super profit.
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