1.

Firms total investment 400000 net profit of last 4 years 65000 50000 80000 70000 the return on net capital employed 12% find value of goodwill if it is based on 4 years purchase of average super profit

Answer»

EXPLANATION:

average PROFIT =super profit+average profit

normal profit=capital enmployed X normalrate of return/100

400000x12/100=48000

average profit=65000+50000+80000+70000/4=66500

super average profit=average profit-normal profit

super profit=66500-48000=18500 ANS



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