00:01
The capital of the firm is given as 1 million.
00:25
The rate of interest, market rate of interest is given to us as 15 % per annum.
00:42
So here we will apply the formula to find our normal profit which is capital employed multiply rate upon 100.
01:08
So our normal profit will be 1 million multiply 15 % that is 150 ,000.
01:25
Now the profits of the last 3 years are given to us.
01:34
For the first year it is 280 ,000.
01:43
For the second year it is 380 ,000.
01:49
And for the third year it is 420 ,000.
01:55
A normal loss of annual salary given to both the partners will be deducted from this profit.
02:05
So the profits after deducting the normal loss comes out to be for the first year 160 ,000.
02:21
For the second year 260 ,000...