Can you explain how does Ad rank impact Cost-Per-Click?

Ad rank tells how high on the SERP the advertisement will be displayed. It is very important to understand the impact of ad rank on CPC because it plays a major role in determining the actual CPC that your competitors pay when someone clicks on their ads. Cost per click is the actual amount that you pay to Google when someone clicks on the ad and not what you are most willing to pay. Ad ranks help to determine both your ad position and CPC of your nearest competitor.