The MacArthur Fellowship is a $500,000 grant, no-strings attached, paid to talented individuals who have shown extraordinary originality and dedication in their creative pursuits, and a marked capacity for self-direction. It is nicknamed the Genius Grant.
One of the winners in 2012 was Arts Entrepreneur Claire Chase, who "[forged] a new model for the commissioning, recording, and live performance of classical music and opened up new avenues of artistic expression for the twenty-first-century musician." Assume the full amount of the grant is paid upfront and a recipient deposits the money in a bank for three years at a 4% rate compounded quarterly. How much would the Genius Grant be worth by then?
The total interest paid on an investment is the difference between cash out, or A, and cash in, or P; that is I = A - P.
If HSBC's wealth management unit offers to invest profits of $750,000 made by an artist on a world tour at 7% compounded semi-annually, locking the money for three years, what is:1. the cash out? 2. the total interest earned by the investment?