Question no. 13

Dear Student,

Capital Employed of the Firm =

T o t a l A s s e t s - C u r r e n t L i a b i l i t i e s = 5, 00, 000 - 30, 000 = R s 4, 70, 000

Normal Profit =

4, 70, 000 \times \frac{20}{100} = R s 94, 000

Now Super Profit =

A v e r a g e P r o f i t - N o r m a l P r o f i t

Also, Goodwill = Rs 64,000 (4 years purchase of Super Profit)
Therefore Super Profit =

\frac{64, 000}{4} = R s 16, 000

Therefore Average Profit =

S u p e r P r o f i t + N o r m a l P r o f i t = 16, 000 + 94, 000 = R s 1, 10, 000

Regards,