Read the passage carefully and answer the next 5 questions.

The books of a business showed that the firm's capital employed on December 31, 2024, ₹5,00,000 and the profits for the last five years were: 2020-₹40,000: 2021-₹50,000; 2022-₹55,000; 2023- ₹70,000 and 2024-₹85,000. You are required to find out the value of goodwill based on 2 years purchase of the super profits of the business, given that the normal rate of return is 10%.

In this case, Normal profit is -

₹50,000

The correct answer is option 1- ₹50,000.

Capital employed = ₹5,00,000
Normal rate of return = 10%
Normal profit = Capital employed x Normal rate of return/100
                    = 5,00,000 x 10/100
                   = 50,000