Total capital employed in the firm is ₹ 8,00,000, reasonable rate of return is 15% and profit for the year is ₹ 12,00,000. The value of goodwill of the firm as per capitalization method would be ______.

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Total capital employed in the firm is ₹ 8,00,000, reasonable rate of return is 15% and profit for the year is ₹ 12,00,000. The value of goodwill of the firm as per capitalization method would be ₹ 72,00,000. Explanation: Normal Profit = Capital Employed $\times$ Normal Rate of Return = 8,00,000 $\times$ 15% = ₹ 1,20,000 Super Profit = Actual Profit − Normal Profit = 12,00,000 − 1,20,000 = ₹ 10,80,000 Goodwill = `"Super Profit" xx 100/"Normal Rate of Return" = 10,80,000 xx $\frac{100}{15}$` = ₹ 72,00,000

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