Sarthaks Test
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A firm earned net profits during the last five years as follows: 

i-Rs.7,000; 

ii – Rs.6,500; 

iii-Rs.8,000; 

IV- Rs.7,500 and 

V-Rs.6,000. 

Capital investment of the firm is Rs.40,000. Fair return on capital in the market is 12%. Find value of goodwill of the business if it is based on three years’ purchase of average super profit of the past five years.

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Goodwill = 2,200 x 3 = 6, 600

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