1. What is the T-Bill Interest Calculation?

The T-Bill interest calculation determines how much interest you'll earn on a $10,000 Treasury Bill based on its yield and the number of days until maturity. Treasury Bills are short-term government securities that pay interest at maturity.

2. How Does the Calculator Work?

The calculator uses the T-Bill interest formula:

Where:

• \( Yield \) — The annualized yield expressed as a decimal (e.g., 0.05 for 5%)
• \( Days \) — The number of days until maturity
• 360 — The day count convention used for T-Bills

Explanation: The formula calculates the actual dollar amount of interest earned on a $10,000 investment in a Treasury Bill.

3. Importance of T-Bill Interest Calculation

Details: Calculating T-Bill interest helps investors compare returns, plan cash flows, and make informed investment decisions about short-term government securities.

4. Using the Calculator

Tips: Enter the yield as a decimal (e.g., 0.025 for 2.5%) and the number of days until maturity. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is 360 days used instead of 365?
A: Treasury Bills use a 360-day year convention (bank interest calculation method) which simplifies calculations and is standard practice.

Q2: How does this differ from bond interest calculations?
A: T-Bills are discount instruments that pay no periodic interest - the return is the difference between purchase price and face value at maturity.

Q3: What's the typical yield range for T-Bills?
A: Yields vary with market conditions but typically range from 0.5% to 5% depending on maturity length and economic environment.

Q4: Are T-Bill interest payments taxable?
A: Yes, interest from T-Bills is subject to federal income tax but exempt from state and local taxes.

Q5: Can I use this for other principal amounts?
A: This calculator is for $10,000 face value. For other amounts, multiply the result by (your_amount/10000).