Average net profit expected in the future by XYZ firm is ₹ 36,000 per year. The average capital employed in the business by the firm is ₹ 2,00,000. The normal rate of return from capital invested in this class of business is 10%. The remuneration of the partners is estimated to be ₹ 6,000 p.a. Calculate the value of goodwill on the basis of two years’ purchase of super profit.
[Ans.: Goodwill – ₹ 20,000.]
Solution:-
