Question

The normal commercial yield on capital invested in a business is 10% p.a. The net capital invested in the business is ₹ 5,00,000. Amount of goodwill. Based on 3 years purchase of super profits is ₹ 30,000. The average profits will be ______.

पर्याय

• ₹ 40,000

• ₹ 50,000

• ₹ 60,000

• ₹ 10,000

Answer 1

The normal commercial yield on capital invested in a business is 10% p.a. The net capital invested in the business is ₹ 5,00,000. Amount of goodwill. Based on 3 years purchase of super profits is ₹ 30,000. The average profits will be ₹ 60,000.

Explanation:

Given:

Normal rate of return = 10%

Capital employed = ₹ 5,00,000

Normal profits = ₹ 5,00,000 × 10% = ₹ 50,000

Goodwill = ₹ 30,000 (based on 3 years’ purchase of super profits)

Goodwill = Super Profits × Number of years’ purchase

30,000 = Super Profits × 3

Super Profits = 10,000

Average Profits = Normal Profits + Super Profits

= 50,000 + 10,000

= 60,000