A firm values goodwill under 'Capitalisation of Profits' method. Average profit of the firm for past 4 years has been determined at Z 1,00,000 (before tax). Capital employed in the business is Z 4,80,000 and its normal rate of return is 12%. Tax rate is 28% on average. Value of Goodwill based on capitalisation of average profit will be: 

(A) Z1,20,000 

(B) Z6,00,000 

(C) 25,00,000 

(D) 24,60,000

Answer rating: 100% (QA)

The correct answer is D 2460000 The formula for valuing goodwill under the capita... View the full answer