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.) a. $1,528.47 b. $1,622.46 c. $1,779.63 d. $1,457.91

Lifetime cost is the total expenses relating to the purchase of a good, like a car, a home, or a refrigerator from the purchase date to the end of the asset's lifespan.

We can calculate the lifetime cost by using an online finance calculator to determine the total payment, including interests, for the asset and then adding up other expenses like repairs and electricity costs.

Data and Calculations:

Base cost of refrigerator = $824

Sales tax = 7.13%

Total cost of refrigerator, including sales tax (loan amount) = $882.75 ($824 x 1.0713)

Average daily electricity consumption = $0.09

Total electricity cost = $262.98 ($0.09 x 8 years x 365 days + $0.09 x 2 leap year days)

Payment period for credit purchase = 3 1/2 years

Total repairs cost = $206.25 ($68.75 x 3)

Period of possessing the refrigerator = 8 years

APR = 10.54% compounded monthly

From an online finance calculator:

Monthly Payment = $25.22

Total Payment = $1,059.24 ($25.22 x 12 x 3.5)

Total Interest for 3 1/2 years = $176.49 ($1,059.24 - $882.75)

Lifetime cost of Jenny's refrigerator = Total loan payment + Electricity cost + Repairs cost)

= $1,528.47 ($1,059.24 + $262.98 + $206.25)

Thus, the lifetime cost of Jenny's refrigerator is A. $1,528.47.

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