CUET UG 2025 — Accountancy Partnership

Normal Profits represent the profit that should be earned based on the capital employed at a normal rate of return in the industry.

The formula for Normal Profits is:

$$\text{Normal Profits} = \text{Capital Employed} \times \frac{\text{Normal Rate of Return}}{100}$$Normal Profits=Capital Employed×100Normal Rate of Return​

Given:

• Capital Employed = Rs. 5,00,000
• Normal Rate of Return = 10%

Calculating Normal Profits:

$$\text{Normal Profits} = 5,00,000 \times \frac{10}{100}$$Normal Profits=5,00,000×10010​

$$= 5,00,000 \times 0.10$$=5,00,000×0.10

$$= \text{Rs. 50,000}$$=Rs. 50,000

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Note that the actual profits given for the five years (Rs. 40,000, Rs. 50,000, Rs. 55,000, Rs. 70,000, and Rs. 85,000) are not directly used to calculate normal profits. Normal profits depend only on the capital employed and the normal rate of return expected in the industry. These actual profits would be relevant for calculating average profits or super profits, but not for normal profits.

Answer: Option 3 - Rs. 50,000