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24 June, 05:53

Ann, Bob, Carol, and Denis own a candy store. After a large argument, they decide to dissolve their partnership using the sealed bid method. Ann bids $320,000 for the store, Bob bids $440,000 for it, Carol bids $240,000 for it, and Denis bids $400,000 for it. What is Ann's fair share? $ What is Bob's fair share? $ What is Carol's fair share? $ What is Denis's fair share? $ Since Bob has the highest bid, he receives the business. After the initial allocation there is a surplus of how much? $ In the final settlement, how much money does Ann receive?

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  1. 24 June, 06:39
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    (a) $80,000; $110,000; $60,000; $100,000

    (b) $90,000

    (c) $102,500

    Explanation:

    (a)

    Fair share is calculated from each player's bid divided by the total number of players.

    Ann's fair share = $320,000/4

    = $80,000

    Bob's fair share = $440,000/4

    = $110,000

    Carol's fair share = $240,000/4

    = $60,000

    Denis's fair share = $400,000/4

    = $100,000

    (b) Since Bob has the highest bid, he receives the business.

    Payments:

    Ann = $80,000 paid by estate

    Bob = $440,000 - $110,000

    = $330,000 owes estate

    Carol = $60,000 paid by estate

    Denis = $100,000 paid by estate

    Therefore,

    Surplus = $330,000 - ($80,000 + $60,000 + $100,000)

    = $90,000

    Split it equally among the four players:

    So, each one receives = $90,000/4

    = $22,500

    (c) In final settlement Ann receive = $80,000 + $22,500

    = $102,500
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