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If average profit is rupees six lakh and normal rate of return is fifteen percent under capitalization of average profit method what will be the capitalized value?

Answer and explanation

Correct answer: Rupees 4000000

Capitalized value is found by dividing average profit by normal rate. Rupees 600000 divided by fifteen percent gives rupees 4000000.

Related tags

GoodwillCapitalisation-Average-ProfitCapitalized-ValuePartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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