The directors of the Community Foundation have almost finished selecting the grants they will fund this year. Three partners in the law firm of Reddy, Willing, and Able established the Community Foundation, with the aim of promoting “equal access to justice for all.” The Community Foundation disperses small and large grants designed to educate people about their legal rights and encourage voter registration and participation in the legal system. The directors are down to the last $50,000 in the grants budget for this year and have narrowed the choice to the following three projects:

Assume that a project is either funded at the requested level or not funded at all. Also, the foundation can add any unallocated funds to its endowment. In other words, the directors need not spend the $50,000 because any remaining money will be put in "savings to be used for future projects.

Required:
a. What are the directors options with regard to the remaining $50,000 in grant money?
b. What is the opportunity cost of funding Project A?
c. Suppose the directors decide on projects one at a time. Their decision rule is to fund the project if its perceived value exceeds the requested amount and to deny the project otherwise. What are the costs and benefits of using such a decision rule? Assume that the directors first consider Project C, then Project B, and finally Project A.
d. Suppose the directors assess the value of Projects A, B, and C at $50,500, $17,500, and $20,000, respectively. Which projects should they fund?

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Project Describtion Amount Requested Help with operating expenses for legal clinics for the indigent. Add self-help law books to the local library system Fund a team of law students to travel to a country in Eastern Europe to help with setting up their court system $50,000 $18,000 $22,000