Problem
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 of purchasing the land (including environmental impact reports, title searches, etc,) average $3,000 per hectore. For the next budget year, SG expect to receive private contributions totaling $19,000,000. All contributions in excess of costs will be used to purchase land.
SG is worried that contributions may decrease by more than the $5,000,000 it has estimated if it takes the 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? (i.e., What is the point of indifference between the two options?)