Question : The goodwill of a firm is Rs.54,000 valued at 4 years purchase of super profit. The capital employed of firm is Rs.2.00,000 and normal rate of return is 10%. The average profit of firm is:
Option 1: Rs.23,500
Option 2: Rs.33,500
Option 3: Rs.20,000
Option 4: Rs.24,500
Correct Answer: Rs.33,500
Solution : Goodwill = Super Profit X Number of years purchase Rs.54,000 = Super Profit X 4 Super profit = Rs.54,000/4 = Rs. 13,500 Normal Profit = Capital employed X Normal rate of return = Rs.2,00,000 X 10% = Rs.20,000 Average Profit = Super Profit + Normal Profit = Rs.13,500 + Rs.20,000 = Rs.33,500. Hence, the correct option is 2.
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