The past average profits of a business works out at ₹20,000 and it is expected that such profits are likely to continue for another three years, the value of goodwill based on average profit method will be.........

₹60,000

The correct answer is option 1- ₹60,000.

Average profits = 20,000

no of years purchase = 3

Goodwill = Average profits x no of years purchase
              = 20,000 x 3
              = 60,000