Average net profit expected in future by XYZ firm is Rs. 36,000 per year. Average capital employed in the business by the firm is Rs. 2,00,000. The normal rate of return for capital invested in this class of business is `10%`. Remuneration of the partners is estimated to be Rs. 6,000 p.a. Calculate the value of goodwill on the basis of two years' purchase of super profit.

Answer

Goodwill - Rs. 20,000.