CVP, Not for profit the Sunrise Group (SG) is an environmentally conscious organization that buys land with the objective of preserving the natural environment. SG receives private contributions and takes no assistance from the government.

Fixed costs of operating the organization are $1,000,000 per year Variable costs (including purchase of land, environmental impact reports and title search) average $3,000 per acre. In 2009, 50 expects to receive contributions of $19,000,000. All contributions in excess of operating costs will be used to purchase land.

1. How many acres will SO be able to purchase in 2009?

2. SG is considering participating in a new government program that will provide 51,000 per acre to subsidize the purchase of environmentally sensitive land. If SG participates in this program they estimate they will lose $5,000,000 in contributions from supporters who believe that accepting money from the government is not consistent with SG\s mission. If SG participates in the program, how many acres of land will SG be able to buy in 2009? On financial considerations alone, should SG take the $1,000 per acre of subsidy?

3. SG is worried that contributions may drop by more than $5,000,000 if it takes the government subsidy. By how much can contributions decrease for SG to be able to buy the same amount of land if it takes the government subsidy or rejects it?