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Question
ABC Ltd earns a profit of Rs 50,000 by employing a capital of Rs 2,00,000, The normal rate of return of a firm is 20%. Calculate Goodwill:
ABC Ltd earns a profit of Rs 50,000 by employing a capital of Rs 2,00,000, The normal rate of return of a firm is 20%. Calculate Goodwill:
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Solution
The correct option is A Rs 50000
Normal Profits = 200,000 * 20% = Rs 40,000
Super profits = 50,000 − 40,000 = Rs 10,000
Goodwill = 10,000 / 20% = Rs 50,000
Rs 50000
Normal Profits = 200,000 * 20% = Rs 40,000
Super profits = 50,000 − 40,000 = Rs 10,000
Goodwill = 10,000 / 20% = Rs 50,000
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