The correct answer is Rs. 100000. Goodwill Valuation: A well-established firm earns a good name in the market, builds trust with the customers, and also has more business connections as compared to a newly set up business. Thus, the monetary value of this advantage that a buyer is ready to pay is termed as Goodwill. Capitalization Method:Capitalization of Average Profits: Under this method, the value of goodwill is calculated by deducting the actual capital employed from the capitalized value of the average profits on the basis of the normal rate of return. Formula: Goodwill = Super Profits x (100/ Normal Rate of Return)Super Profit = Average Profit “ Normal ProfitNormal Profit = Capital employed x Normal Rate of Return/100Important PointsGiven Information:Capital employed = Rs. 150000Average Profit = Rs. 50,000The normal rate of profits = 20%Working Note:Normal Profit = Capital employed x Normal Rate of Return/100 = 150000x 20/100 = 30,000Super Profit = Average Profit “ Normal Profit = 50,000 “ 30,000 = 20,000Goodwill = Super Profit x (100/ Normal Rate of Return) = 20000 x 100/20 = 100000. Therefore, Capital employed in a business is Rs. 150000. profits are Rs. 50000/-and the normal rate of profits is 20%. The amount of goodwill as per the capitalization method would be Rs. 100000