Barbara and Fred have decided to put in an automatic sprinkler system at their cabin. They have requested bids, and the lowest price received is \($5\),500 from Water Systems Inc (WSI). They decide to do the job themselves and obtain a set of materials (plastic pipe, nozzles, fittings, and regulators) from an all-sales-are-final discount house for \($1\),100. They begin the installation and rent a trencher at \($80\) per day. Unfortunately, they quickly hit sandstone in many places of the yard and require a jackhammer and air compressor at another \($80\) per day. They keep all the rental equipment for 5 days. By this time, Fred has hurt his knee, and Barbara is sick of the project. They again contact WSI, who tells them that they can use only some of the materials, reducing the cost by \($500\), and only some of the trenching, reducing the cost by another \($500\), bringing the total to \($4\),500, finished and ready to go.

a. How much have they already spent?

b. How much will they have spent when the project is over if they accept the new offer from WSI?

c. A different contractor, Sprinkler Systems (SS), who heard of their situation approaches Barbara and Fred and recommends a design for a sprinkler system that would require a different set of materials and a new routing of the trenches. They offer to (1) backfill all existing trenches, (2) cut new trenches with their rock-impervious Ditch Witch, and (3) install the system. Their charge is \($6\),000, for a finished-and-ready-to-go project, and they correctly note that this is less than the total that will have been spent if Barbara and Fred go with WSI. Should Barbara and Fred go with WSI or SS? Why?

d. Of the ten principles, which one(s) is well illustrated by this problem?

e. Of the systematic economic analysis technique’s seven steps, which one(s) is well illustrated by this problem?