The average profit earned by a firm is ₹ 75,000 which includes undervaluation of stock of ₹ 5,000 on an average basis. The capital invested in the business is ₹ 7,00,000 and the normal rate of return is 7%

The average profit earned by a firm is ₹ 75,000 which includes undervaluation of stock of ₹ 5,000 on an average basis. The capital invested in the business is ₹ 7,00,000 and the normal rate of return is 7%. Calculate goodwill of the firm on the basis of 5 times the super profit.

[Ans. Adjusted Profit ₹ 80,000; Goodwill ₹ 1,55,000.]