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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


Team Careers360 8th Jan, 2024
Answer (1)
Team Careers360 11th Jan, 2024

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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