Harriet used her credit card to buy a $779 laptop, which she paid off by making identical monthly payments for two and a half years. Over the six years that she kept the laptop, it cost her an average of $0.36 of electricity per day. Harriet’s credit card has an APR of 11.27%, compounded monthly, and she made no other purchases with her credit card until she had paid off the laptop. What percentage of the lifetime cost of the laptop was interest? (Assume that there were two leap years over the period that Harriet kept the laptop, and round all dollar values to the nearest cent.)
The monthly interest rate is 11.27% ÷ 12. Using that rate for 30 monthly payments, the payment is about $29.92, so Harriet paid $897.60 in total and $118.60 of that was interest. The laptop used 2,192 days of electricity (six years plus two leap days), costing 2,192 × $0.36 = $789.12. Thus interest was $118.60 ÷ ($897.60 + $789.12) × 100 ≈ 7.03% of the laptop’s lifetime cost, which is choice A, 7.03%.
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