Question

Anne, Bette, and Chia own a flower shop. They​ can't get along anymore and decide to break up the partnership using the method of sealed​ bids, with the understanding that one of them will get the flower shop and the other two will get cash. Anne bids ​$300000​, Bette bids ​$360000​, and Chia bids ​$330,000. How much money do Anne and Chia each get from Bette for their third share of the flower​ shop?

Answer 1

Answer:

Anne = $110,000

Chia = $120,000

Step-by-step explanation:

Given the following :

Anne's bid = ​$300000​

Bette's bid = ​$360000​

Chia's bid = ​$330,000

Bette has the highest bid = she gets the flower shop

Value earned by Anne and Chia = 0

Fair share value :

Bid / number of partners

Anne = $300,000 / 3 = $100,000

Bette = $360,000 / 3 = $120,000

Chia = $330,000 / 3 = $110,000

Hence, value earned - fair share value ;

Anne = (0 - 100,000) = ($100,000)

Bette = (360,000 - 120,000) = $240,000

Chia = (0 - 110,000) = ($110,000)

Surplus :

$240,000 - ($100,000 + $110,000)

$240,000 - $210,000

= $30,000

Surplus/ number of partners

$30,000 / 3 = $10,000

Amount paid by Bette to:

Anne = $100,000 + $10,000 = $110,000

Chia = $110,000 + $10,000 = $120,000