In an Auction Where the Bidders Values Are $740,$700,$660,$650,$400,$325 and $300,the

question 48

Multiple Choice

In an auction where the bidders values are $740,$700,$660,$650,$400,$325 and $300,the highest three bidders decide to form a bid-rigging cartel.What would the winning bid be in this auction?

• A)​$741
• B)$701
• C)$651
• D)​$631

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Definitions:

Present Value

The current value of a future amount of money or stream of cash flows given a specified rate of return.

Ordinary Annuity

A series of equal payments made at regular intervals, such as monthly or annually, over a specified period.

Annuity Due

An annuity payment arrangement where payments are made at the beginning of each period, as opposed to the end, which is the case with an ordinary annuity.

Return Requirement

A specified rate of return that investors expect to receive from an investment.