A business has earned average profit of 4 00 000 during the last few years and the normal rate of re......

A business has earned average profit of 4,00,000 during the last few years and the normal rate of return in similar business is 10%. Find value of goodwill by:

i Capitalisation of Super Profit Method, and

ii Super Profit Method if the goodwill is valued at 3 years' purchase of super profits. Assets of the business were 40,00,000 and its external liabilities 7,20,000.

By: NIHARIKA WALIA