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The present value of annuity of 1 rupees for 5 years at 10% per annum interest is rupees 3.78, super profit is 19600 find out the goodwill?
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The present value of annuity of 1 rupees for 5 years at 10% per annum ...
Calculation of Goodwill
Given:
Present value of annuity of 1 rupee for 5 years at 10% per annum interest = Rs. 3.78
Super profit = Rs. 19600
Step 1: Determination of Normal Profit
Normal profit is the profit earned by a business in the normal course of operations. It is calculated by multiplying the capital employed by the normal rate of return.
Let us assume that the capital employed by the business is Rs. X.
Normal rate of return = 10%
Normal profit = X * 10%
Step 2: Calculation of Super Profit
Super profit is the amount of profit earned by a business over and above the normal profit.
Super profit = Actual profit - Normal profit
Given, Super profit = Rs. 19600
Step 3: Calculation of Goodwill
Goodwill is the value of the reputation and customer base of a business. It is calculated as the number of years' purchase of the super profit.
Number of years' purchase = Present value of annuity / Super profit
Number of years' purchase = Rs. 3.78 / Rs. 19600
Goodwill = Number of years' purchase * Super profit
Goodwill = 0.000193 * Rs. 19600
Goodwill = Rs. 3.77 (approx.)
Therefore, the goodwill of the business is Rs. 3.77 (approx.).
Given:
Present value of annuity of 1 rupee for 5 years at 10% per annum interest = Rs. 3.78
Super profit = Rs. 19600
Step 1: Determination of Normal Profit
Normal profit is the profit earned by a business in the normal course of operations. It is calculated by multiplying the capital employed by the normal rate of return.
Let us assume that the capital employed by the business is Rs. X.
Normal rate of return = 10%
Normal profit = X * 10%
Step 2: Calculation of Super Profit
Super profit is the amount of profit earned by a business over and above the normal profit.
Super profit = Actual profit - Normal profit
Given, Super profit = Rs. 19600
Step 3: Calculation of Goodwill
Goodwill is the value of the reputation and customer base of a business. It is calculated as the number of years' purchase of the super profit.
Number of years' purchase = Present value of annuity / Super profit
Number of years' purchase = Rs. 3.78 / Rs. 19600
Goodwill = Number of years' purchase * Super profit
Goodwill = 0.000193 * Rs. 19600
Goodwill = Rs. 3.77 (approx.)
Therefore, the goodwill of the business is Rs. 3.77 (approx.).
Community Answer
The present value of annuity of 1 rupees for 5 years at 10% per annum ...
20000*3.78
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The present value of annuity of 1 rupees for 5 years at 10% per annum interest is rupees 3.78, super profit is 19600 find out the goodwill?
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The present value of annuity of 1 rupees for 5 years at 10% per annum interest is rupees 3.78, super profit is 19600 find out the goodwill? for B Com 2025 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about The present value of annuity of 1 rupees for 5 years at 10% per annum interest is rupees 3.78, super profit is 19600 find out the goodwill? covers all topics & solutions for B Com 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The present value of annuity of 1 rupees for 5 years at 10% per annum interest is rupees 3.78, super profit is 19600 find out the goodwill?.
The present value of annuity of 1 rupees for 5 years at 10% per annum interest is rupees 3.78, super profit is 19600 find out the goodwill? for B Com 2025 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about The present value of annuity of 1 rupees for 5 years at 10% per annum interest is rupees 3.78, super profit is 19600 find out the goodwill? covers all topics & solutions for B Com 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The present value of annuity of 1 rupees for 5 years at 10% per annum interest is rupees 3.78, super profit is 19600 find out the goodwill?.
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