The adjusted net profit of a business is Rs. 2,00,000 and the amount of capital employed is Rs. 12,50,000. If goodwill is to be calculated on basis of 3 year purchase of super profit and the normal rate of return is 10% then the value of goodwill will be

Solution (By Examveda Team)

The correct option is "Rs. 2,25,000".

Children, let us carefully solve this step by step.

Step 1: Normal Profit
We know that Normal Profit = Capital Employed × Normal Rate of Return.
Here, Capital Employed = Rs. 12,50,000 and NRR = 10%.
So, Normal Profit = 12,50,000 × 10% = Rs. 1,25,000.

Step 2: Super Profit
Super Profit = Adjusted Net Profit – Normal Profit.
Adjusted Net Profit = Rs. 2,00,000.
Normal Profit = Rs. 1,25,000.
So, Super Profit = 2,00,000 – 1,25,000 = Rs. 75,000.

Step 3: Goodwill
Goodwill is calculated on the basis of 3 years’ purchase of Super Profit.
Goodwill = 75,000 × 3 = Rs. 2,25,000.

Final Answer:
Thus, the value of goodwill is Rs. 2,25,000 which is Option B.