The books of a business showed that the firm's capital employed on December 31, 2015, is . The profits for the last five years were:2011: 2012: 2013: 2014: 2015: Find out the normal profits of the business, given that the normal rate of return is .
- A
- B
- C
- D
Solution & Step-by-step Explanation
Normal Profit is calculated as the product of Capital Employed and the Normal Rate of Return. The past historical actual profits given in the problem statement are extraneous information here since we only need the capital base.