Jenny used her credit card to buy a refrigerator with a base cost of $824. The refrigerator consumed an average of $0.09 in electricity every day. Jenny made regular monthly payments for three and a half years, at which point the refrigerator was paid off. Over the eight years that Jenny had the refrigerator, it needed repairs three times, costing $68.75 each time. If Jenny’s credit card has an APR of 10.54%, compounded monthly, and sales tax in Jenny’s area is 7.13%, what was the lifetime cost of Jenny’s refrigerator? Assume that Jenny made no other purchases with her credit card, and round all dollar values to the nearest cent. (Remember that leap year occurs every four years.)
Sales tax makes the refrigerator’s financed price $824 × 1.0713 = $882.79. With a monthly rate of 10.54% ÷ 12 and 42 monthly payments, the payment is about $25.22, for total payments of $1,059.24. Eight years include two leap days, so electricity costs 2,922 × $0.09 = $262.98; repairs cost 3 × $68.75 = $206.25. Adding these costs gives $1,528.47, choice A.
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