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Standard VIII

Mathematics

Sales Tax / VAT

The profits o...

Question

The profits of last $5$ years are $R s .60, 000$ ; $R s .67, 500$ ; $R s .52, 500$ ; $R s .75, 000$ & $R s .60, 000$ . Find the value of goodwill, if it is calculated on average profits of last $5$ years on the basis of $3$ years of purchase.

R s .63, 750

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R s .1, 91, 250

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R s .1, 89, 000

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R s .2, 13, 750

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Solution

The correct option is C $R s .1, 89, 000$
Calculation of goodwill:
1. Average profit = Total profit/ No. of years
Average profit = Rs. (60000 + 67500 + 52500 + 75000 + 60000)/ 5
Average profit = Rs. 315000/ 5
Average profit = Rs. 63000
2. Goodwill = Average profit * No. of years purchase
Goodwill = Rs. 63000 * 3
Goodwill = Rs. 189000

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The profits of last 5 years are Rs.60,000; Rs.67,500; Rs.52,500; Rs.75,000 & Rs.60,000. Find the value of goodwill, if it is calculated on average profits of last 5 years on the basis of 3 years of purchase.

The profits of last $5$ years are $R s .60, 000$ ; $R s .67, 500$ ; $R s .52, 500$ ; $R s .75, 000$ & $R s .60, 000$ . Find the value of goodwill, if it is calculated on average profits of last $5$ years on the basis of $3$ years of purchase.