Homework Answers
Calculation of Average Profit ( in Dhs)
| Year | Profits | Weight | Profits * Weight |
| 2015 | 120,000 | 1 | 120,000 |
| 2016 | 136,000 | 1.5 | 204,000 |
| 2017 | 164,000 | 2 | 328,000 |
| 2018 | 172,000 | 2.5 | 430,000 |
| Sum Total | 7 | 1,082,000 |
Weighted Average Profit = $1,082,000/7 = $154,571.43
Goodwill = 3 years purchase of weighted average profit = 3 * $154,571.43 = $463,714.29
Value of goodwill = $463,714.29
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