Atul and Bipul had a firm in which they had invested ₹ 50,000. On average, the profits were ₹ 16,000. The normal rate of return in the industry is 15%. Goodwill is to be valued at four years’ purchase of profits in excess of profits @ 15% on the money invested. Calculate the value of goodwill.
[Ans.: Goodwill – ₹ 34,000.]
Solution:-
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