Calculate the value of goodwill of the business on the basis of an annuity of super profit, taking…

The net profit of a company after providing for taxation for the past 5 years are Rs.1,60,000; Rs.1,68,000; Rs.1,80,000; Rs.1,84,000 and Rs.1,88,000. The capital employed in the business is Rs.16,00,000, on which a reasonable rate of return of 10% is expected. It is expected that the company will be able to maintain its super profit for the next 5 years. Calculate the value of goodwill of the business on the basis of an annuity of super profit, taking the present value of annuity of Rs.1 for 5 years @ 10% interest at Rs.3.78.

 

Looking for a Similar Assignment? Let us take care of your classwork while you enjoy your free time! All papers are written from scratch and are 100% Original. Try us today! Use Code FREE15