From the following information calculate Capitalised value of the firm.

Normal Rate of Return - 12%
Profits for last three years-
i. ₹80,000 (including gain on the sale of fixed assets of ₹30,000)
ii. ₹1,50,000
iii. ₹2,00,000 (including a loss by theft of ₹32,000).

 ₹12,00,000

The correct answer is option 1-  ₹12,00,000.

Average profit = [(80,000 - 30,000) + 1,50,000 + ( 2,00,000 + 32,000)/]3
                     = (50,000 + 1,50,000 +2,32,000)/3
                     = 4,32,000/3
                     =  ₹1,44,000

Capitalised Value of business = Average profit x 100 / Normal rate of return
                                          = 1,44,000 x 100/12
                                          = 12,00,000