Question

"The MacArthur Fellowship is a $625,000, no-strings-attached award to extraordinarily talented and creative individuals as an investment in their potential. There are three criteria for selection of Fellows: (1) Exceptional creativity; (2) Promise for important future advances based on a track record of significant accomplishments; and (3) Potential for the Fellowship to facilitate subsequent creative work. Each fellowship comes with a stipend of $625,000 to the recipient, paid out in equal quarterly installments over five years (therefore, $31,250 per quarter)."

One of the recipients in 2019 was "Mary Halvorson, a guitarist, ensemble leader, and composer who is pushing against established musical categories with a singular sound on her instrument and an aesthetic that evolves with each new album and configuration of bandmates. She melds her jazz roots with elements of experimental rock, folk, and other musical traditions, reflecting a wide range of stylistic influences."

Supposing that at the end of every quarter Mary is depositing the stipend she receives into an investment account that is paying an average annual return of 10% (similar to S&P 500 index). How much would Mary have at the end of the five years?

(Please work out thoroughly, need to understand the work process)

Answer 1

Amount available at the end of 5 years is the Future Value of annuity= $798,270.55

Calculation as follows: