If Average Capital Employed in a firm is ₹9,00,000, Average Profits ₹2,80,000, and Normal rate of return is 20%, then the value of goodwill as per capitalisation of super profits is :

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Correct answer: b) ₹ 5,00,000. Option B Normal Profit = Capital Employed x Normal Rate of Return $=9,00,000\times \frac{20}{100}\ =₹1,80,000$ Super Profit = Average Profit - Normal Profit $=2,80,000-1,80,000\ =₹1,00,000$ Goodwill = $\frac{\mathrm{Super}\mathrm{Profit}}{\mathrm{Normal}\mathrm{Rate}\mathrm{of}\mathrm{Return}}$ $=\frac{1,00,000}{20}\times 100\ =₹5,00,000$

If Average Capital Employed in a firm is ₹9,00,000, Average Profits ₹2,80,000, and Normal rate of return is 20%, then th…

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