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Q38. Average capital employed Rs. 5,00,000 Normal rate of return10% Goodwill at 5 years purchase of super profit Rs. 98,000. Calculate the average profit a) Rs. 69,600 b) Rs. 1,48,000 c) Rs. 4,40,000 d) Rs. 48,000 |
how to calculate avg. profit
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Q38. Average capital employed Rs. 5,00,000 Normal rate of return10% Goodwill at 5 years purchase of super profit Rs. 98,000. Calculate the average profit a) Rs. 69,600 b) Rs. 1,48,000 c) Rs. 4,40,000 d) Rs. 48,000 |
super profit = average profit - normal profit
=> 98000 = AP - { capital employed x normal rate of return}
=> 98000 = AP - { 500000 x 10% }
=> 98000 = AP - 50000
so average profit = 98000+50000
AP = 148000
but some classes said answer is 69600
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