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Explain various methods of valuation of goodwill in detail |
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Answer» In the annuity method, goodwill can be calculated by taking average super PROFIT. This particular profit is the value of an annuity over a certain number of YEARS. Computation of the present value of this annuity is done by DISCOUNTING it at the GIVEN rate of interest, i.e. on the NORMAL rate of return. |
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