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I have tried to give you a picture of how your Actual CPC is calculated. I always thought that the actual cpc is calculated in this manner.

Have furnished the sample figures below:

Londener (Max bid) = 0.75
First Lowest Ad (Max bid)= 0.70
Second Lowest Ad (Max bid)= 0.49

The scenario while all the three Ads are displayed;

How actual CPC will be calculated;

Max bid = 0.75 multiplied by your quality score will be the Ad rank. The ad postion will be carved out of this Ad rank, whomever has got a high Ad rank they will be winning the highest position.

Once Google has decided upon the position then the actual cpc will be calculated. The actual cpc will be the Ad Rank of first lowest ad divided by your quality score and also .01 cent addition to that amount.

This is how the actual cpc is calculated.

I have assumed 1.8 as the quality score for all the three ads.

(A) Londener (Max bid) = 0.75 Quality score = 1.8 Ad rank= 1.35 Actual cost= Ad rank b/Quality score A + .01 = .71
(B) First Lowest Ad (Max bid)= 0.70 Quality score = 1.8 Ad rank= 1.26 Actual cost=Ad rank c/Quality score B + .01 = .49
(C) Second Lowest Ad (Max bid)= 0.49 Quality score = 1.8 Ad rank= 0.88 Actual cost= As there are no competitors below this Ad, the min bid alloted for the keyword will be charged.

The scenario when only two Ads are displayed;

Londener (Max bid) = 0.75
Second Lowest Ad (Max bid)= 0.49

A) Londener (Max bid) = 0.75 Quality score = 1.8 Ad rank= 1.35 Actual cost= Ad rank b/Quality score A + .01 = .49
(B) Second Lowest Ad (Max bid)= 0.49 Quality score = 1.8 Ad rank= 0.88 Actual cost= As there are no competitors below him, the min bid alloted for the keyword will be charged.

Unless we know the Quality score of other advertisers, we cannot determine the actual cpc.

http://forums.seochat.com/google-adwords-more-39/tricky-adwords-question-153310.html#post495704