Under the average profits method of valuing goodwill, how is the value of goodwill calculated?

Under the average profits (years’ purchase) method, goodwill equals average maintainable profit multiplied by the agreed number of years’ purchase. Dividing super profit by the normal rate is the capitalisation of super profits method, and dividing average profit by the normal rate gives the capitalised value of the whole business, from which net assets must still be deducted.