Income Approach

As seen before, the (before‐tax) profits of Khanna Fruits equal its revenues of 35,000 minus its wage costs of Rs. 15,000. The profits of Sharma Juices equal its revenues of Rs. 40,000 minus the Rs. 25,000 the company paid to buy oranges and the Rs. 10,000 in wages to its employees. Adding the Rs. 20,000 profit of Khanna Fruits, the Rs. 5,000 profit of Sharma Juices, and the Rs. 25,000 in wage income received by the employees of the two companies, we get a total of Rs. 50,000, the same amount determined by the product approach.