The Profit for the five years of a firm are as follows ₹4,00,000, ₹3,98,000, ₹4,50,000, ₹4,45,000 and ₹5,00,000. Calculate goodwill of the firm on the basis of 4 years purchase of 5 years average profit.

₹17,54,400

The correct answer is option 3- ₹17,54,400.

Total profit of 5 year =  ₹4,00,000 + ₹3,98,000 + ₹4,50,000 + ₹4,45,000 + ₹5,00,000
                              = 21,93,000

AVERAGE PROFIT = Total profits/No of years
                          = 21,93,000/5
                          = 4,38,600

Goodwill = Average profit x No of years purchase
             = 4,38,600 x 4
             = ₹17,54,400