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.
