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Jane Chang is making plans for a summer vacation. She will take $1,000 with her in the form of traveler’s checks. From the newspaper, she finds that if she purchases the checks by May 31, she will not have to pay a service charge. That is, she will obtain $1,000 worth of traveler’s checks for $1,000. But if she waits to buy the checks until just before starting her summer trip, she must pay a 1% service charge. (It will cost her $1,010 for $1,000 of traveler’s checks.) Jane can obtain a 13% interest rate, compounded weekly, on her money. How many weeks after May 31 can she begin her trip and still justify buying the traveler’s checks on May 31?

Financial Management, Finance

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