On 30 June 2017 Jones and Sons Ltd acquired all the assets, except the investments, of Spade Ltd. The following are the summaries of the statements of profit or loss of Spade Ltd for the years ending 30 June 2015, 2016 and 2017:

The purchase price is to be the amount on which an estimated maintainable profit would represent a return of 20% per annum.
The maintainable profit is to be taken as the average of the profits of the three years 2015, 2016 and 2017, after making any necessary adjustments.
You are given the following information:
(a) The cost of the plant and machinery was £96,000. It has been agreed that depreciation should have been written off at the rate of 10% per annum using the straight line method.
(b) A new type of wrapping material means that wrapping expenses will be halved in future.
(c) By switching to a contract supply basis on motor fuel and motor repairs, it is estimated that motor expenses will fall by 25% in future.
(d) Inventory treated as valueless at 30 June 2014 was sold for £7,520 in 2016.
(e) The working capital of the new company is sound and it is felt that there will be no need for a bank overdraft in the foreseeable future.
(f) Management salaries have been inadequate and will have to be increased by £56,000 a year in future.
You are required to set out your calculation of the purchase price. All workings must be shown. In fact, your managing director, who is not an accountant, should be able to decipher how the price was calculated.

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Motor expenses Management salaries Depreciation of plant and machinery Overdraft interest Wrapping expenses Preliminary expenses written off Net profit 2015 2016 2017 15,040 15,840 16,480 Gross profit 51,200 56,000 57,600 Investment income 19,200 15,360 12,288 Rents received 1,792 2,176 Profit on sale of 704 property 9,168 9,792 7,040 185,360 226,960 192,224 279,520 332,160 290,560 8,016 2015 2016 2017 236,680 285,120 283,840 3,360 4,640 6,720 12,480 - 5,280 37,120 279,520 332,160 290,560