How is normal profit calculated in the context of valuing goodwill?

Firm's capital multiplied by the normal rate of return

Normal profit is calculated in the context of valuing goodwill by multiplying the firm's capital by the normal rate of return. The normal rate of return represents the expected or standard rate of return on the capital employed in a similar business. To calculate the normal profit, the firm's capital, which includes partners' capital and reserves and surplus, is multiplied by the normal rate of return. This calculation provides an estimate of the expected profit that would be considered normal for a business of similar nature and capital investment. The normal profit serves as a benchmark or baseline against which the excess or super profits are measured when valuing goodwill based on the super profits method.