A firm's profit for the last three years are 100,000, 2,00,000 and 3,00,000. What is the value of Goodwill, if it is calculated on the basis of four year's purchase of the average profits of the last 3 years?

Rs 8,00,000

The correct answer is Option (2) → Rs 8,00,000

Total Profit = 100,000 + 200,000 + 300,000
                = 600,000

Average Profit = Total profit / no of years
                      = 600,000/3
                      = 200,000

Goodwill = Average Profit × No of years purchase
Goodwill = 200,000 × 4
             = 800,000