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The average profit of a business over last five year amounted to Rs 165000 normal rate of return in such a business team to be 10% per annum amount of goodwill valued at ₹ 82500 which is based on 3 year of super purchase of super profit calculate the net capital invested in business?
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The average profit of a business over last five year amounted to Rs 16...
Calculation of Net Capital Invested in Business

Given:
- Average profit over the last five years = Rs 165,000
- Normal rate of return = 10% per annum
- Goodwill value = Rs 82,500
- Goodwill is based on 3 years of super profit

Step 1: Calculate Super Profit
- Normal profit = Rs 165,000 / 0.10 = Rs 1,650,000
- Super profit = Rs 1,650,000 - Rs 165,000 = Rs 1,485,000

Step 2: Calculate Capitalization of Goodwill
- Goodwill = Super profit x Number of years
- Goodwill = Rs 1,485,000 x 3 = Rs 4,455,000

Step 3: Calculate Net Capital Invested
- Net Capital Invested = Goodwill + Capital Employed
- Net Capital Invested = Rs 82,500 + Capital Employed

Step 4: Calculate Capital Employed
- Capital Employed = Normal profit / Normal Rate of Return
- Capital Employed = Rs 1,650,000 / 0.10 = Rs 16,500,000

Step 5: Calculate Net Capital Invested
- Net Capital Invested = Rs 82,500 + Rs 16,500,000
- Net Capital Invested = Rs 16,582,500
Therefore, the net capital invested in the business is Rs 16,582,500.
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The average profit of a business over last five year amounted to Rs 165000 normal rate of return in such a business team to be 10% per annum amount of goodwill valued at ₹ 82500 which is based on 3 year of super purchase of super profit calculate the net capital invested in business?
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The average profit of a business over last five year amounted to Rs 165000 normal rate of return in such a business team to be 10% per annum amount of goodwill valued at ₹ 82500 which is based on 3 year of super purchase of super profit calculate the net capital invested in business? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The average profit of a business over last five year amounted to Rs 165000 normal rate of return in such a business team to be 10% per annum amount of goodwill valued at ₹ 82500 which is based on 3 year of super purchase of super profit calculate the net capital invested in business? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The average profit of a business over last five year amounted to Rs 165000 normal rate of return in such a business team to be 10% per annum amount of goodwill valued at ₹ 82500 which is based on 3 year of super purchase of super profit calculate the net capital invested in business?.
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