Question

compute the value of goodwill at three years purchase of the average profits of the last five years. the profit of the last five years were as follows: 1st year-$4600,2nd year 7400, 3rd year -9000,4th year -4000,5th year -5000.​

Answer 1

Answer:

good will is (9120)

Explanation:

good will = average profit/loss * no year purchase

= (3040) * 3

= (9120)

average profit/loss = year of profit/loss ÷ no of years

= (4600)+7400+(9000)+(4000)+(5000)/5

=(3040)