# Sonu , one of the 3 partners in a firm , retired from business . His share in profits and losses was 2/5. His share in goodwill of the firm calculated on the basis of 2 years' purchase of superprofit was Rs. 20,000 and the firm's average annual profit was Rs. 40,000 . In the same business normal rate of earning profit is 10%. Calculate the amount of capital invested in the firm.

Dear Student,

Sonu's Share of Goodwill is given as Rs 20,000 (calculated on the basis of 2 years' purchase of super profit)

Goodwill of the firm will be Rs 50,000 $\left(20,000×\frac{5}{2}\right)$

Now, we know that

Also, we know

Based on this, the amount of capital invested in the firm can be calculated as,

• 1
capital invested = average profit x100/10 = 40000 x 100/10 = 400000
• 0
What are you looking for?