Cpt june 12 a/c problem

 

Q38.     Average capital employed Rs. 5,00,000 Normal rate of return10% Goodwill at 5 years purchase of super profit                                         Rs. 98,000. Calculate the average profit

            a)         Rs. 69,600

            b)         Rs. 1,48,000

            c)         Rs. 4,40,000

            d)         Rs. 48,000

 
how to calculate avg. profit 
 

 

 

Replies (4)

super profit = average profit - normal profit

=> 98000 = AP  - { capital employed  x  normal rate of return}

=> 98000 = AP  - { 500000 x 10% }

=> 98000 = AP - 50000

so average profit = 98000+50000

AP = 148000

but some classes said answer is 69600 

The Correct Ans. Is 69,600. Bcos, G/W=[A.P.-N.P.]*5 Goodwill/5=[AP-5,00,000*10%] 98000/5=AP-50000 19600+5000=AP AP=69600
Arvind Ji 98000 is the goodwill at 5 yrs purchase value so Super Profit is only 19600 =(98000/5)

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