Question

The goodwill of the firm is valued at 2,40,000 at 2 years’ purchase of average profits of last 4 years. The profits of the second year were twice the profits of the first year and in the third year, profits were one and half times of the profits of the second year. The profits of the fourth year were four times of the profits of the first year. Calculate profits of first, second, third and fourth year.

Answer 1

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Answer 2

Answer:

Goodwill of last four years : 40,000 / 4

: 10,000

Goodwill at two years purchase : 10,000 x 2

: 20,000

Explanation:

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