Calculate the Normal Rate of Return if normal profit is ₹30,000. Assets ₹5,30,000 and liabilities ₹30,000, while calculating the value of goodwill of the firm at the time of admission of a partner.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) - 6%.
Capital employed = Assets - Liabilities
= 5,30,000 - 30,000
= ₹5,00,000
Normal profit = Capital employed x Normal rate of return/100
30,000 = 5,00,000 x Normal rate of return/100
Normal rate of return = 30,000/5,00,000 X 100
= 6%