Gupta and Bose had a firm in which they had invested ₹ 50,000. On an 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 goodwill.

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Solution

Number of years’ purchase = 4

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Similar questions

Q. Gupta and Bose had a firm in which they had invested Rs.

50, 000

. On a average, the profits were Rs.

16, 000

. The normal rate in the industry is

15

. Goodwill is to be valued at four years purchase of profits in excess of profits @

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on the money invested. Find the value of the goodwill.

Q. Goodwill is to be valued at three years' purchase of four years' average profit. Profits for last four years ending on 31st March of the firm were:
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