CPT incorporated is a local manufacturer of conveyor systems. Last year, CPT sold over $2 million worth of conveyor systems that netted the company $100,000 in profits. Raw materials and labor are CPTs biggest expenses. Spending on structural steel alone amounted to over $500,000, or 25 percent of total sales. In an effort to reduce costs, CPT now uses an online procurement procedure that is best described as a first-price, sealed-bid auction. The bidders in these auctions utilize the steel for a wide variety of purposes, ranging from art to skyscrapers. This suggests that bidders value the steel independently, although it is perceived that bidder valuations are evenly distributed between $7,000 and $26,000.

You are the purchasing manager at CPT and are bidding on three tons of six-inch hot-rolled channel steel against 6 other bidders. Your company values the three tons of channel steel at $18,000.

What is your optimal bid?

Instructions: Enter your response rounded to the nearest penny (two decimal places).