The goodwill based on capitalization of average profit method is valued at ₹1,80,000. If Net Assets are ₹8,20,000 then find the capitalized value of average profits.

₹10,00,000

The correct answer is option 3- ₹10,00,000.

Goodwill = 1,80,000

Net assets of the business = 8,20,000

Goodwill = Capitalised value of average profits - Net assets
1,80,000 =  Capitalised value of average profits - 8,20,000

Capitalised value of average profits = 1,80,000 + 8,20,000
                                                   = 10,00,000