Question

Jamal has owned his home for about 5 years. His refrigerator needs to be replaced and Jamal is thinking about buying an Energy Star-labeled model that will save money on his utility bills. The model he is looking at costs $598 and advertises a cost of only 12 cents per day. Jamal has calculated that he spends about $132 per year on his old refrigerator. How long would it take for the new refrigerator to pay for itself in lower utility costs? Round to the nearest whole year.
a.
7 years
b.
14 years
c.
5 years
d.
11 years

Answer 1

New fridge annual cost = $0.12/day × 365 = $43.80.
Annual savings = $132 − $43.80 = $88.20.
Payback time = $598 ÷ $88.20 ≈ 6.78 years → rounds to 7 years.

Answer: a. 7 years.