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Profits are ₹30000 ₹45000 and ₹60000 with weights 1:2:3. What is goodwill at 2 years purchase of weighted average profit?

Answer and explanation

Correct answer: ₹100000

Direct answer: option C, ₹1,00,000. Weighted average gives greater importance to the profit assigned a greater weight. Multiply each profit by its weight: ₹30,000 × 1 = ₹30,000; ₹45,000 × 2 = ₹90,000; ₹60,000 × 3 = ₹1,80,000. Add weighted profits: ₹30,000 + ₹90,000 + ₹1,80,000 = ₹3,00,000. Add weights: 1 + 2 + 3 = 6. Weighted average profit = ₹3,00,000/6 = ₹50,000. Goodwill at two years’ purchase = ₹50,000 × 2 = ₹1,00,000. Option A is only the weighted average, not two years’ purchase. Option B, ₹75,000, uses no valid calculation. Option C is correct. Option D, ₹1,20,000, is also unsupported. The supplied answer is consistent. Memory cue: weighted average = total weighted profit ÷ total weights, then multiply by years’ purchase.

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