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 profit = 20,000
No of years purchase = 3 years

Goodwill = Average profit  x  No of years purchase
             = 20,000 x 3
             = 60,000