1) Suresh and Ramesh are sharing profits and losses equally. They agreed to admit Umesh with 1/5th share in partnership. He agreed to bring in cash his share of goodwill. It was decided to value goodwill as per Capitalization method. The past profits of the firm for five years are as follows: Year Profits 2002 30000 2003 40000 2004 50000 2005 60000 2006 70000 Rate of normal profit is 10%. On 31/12/2006 Capital employed was Rs.400000. Calculate the amount of cash that Umesh will bring as his share of goodwill.
a] Rs.166000
b] Rs.100000
c] Rs.166670
d] None of these
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