1. What is the T-Bill Investment Calculator?

The T-Bill Investment Calculator computes the future value of a Treasury Bill investment based on the purchase price, yield, and days to maturity. Treasury Bills are short-term government securities that pay interest based on the difference between purchase price and face value.

2. How Does the Calculator Work?

The calculator uses the T-Bill investment formula:

Where:

• \( \text{Purchase Price} \) — The amount paid for the T-Bill ($)
• \( \text{Yield} \) — The annualized yield (decimal form)
• \( \text{Days} \) — Days to maturity

Explanation: The formula calculates the investment's value at maturity by applying the yield over the specified period using a 360-day year convention common in financial calculations.

3. Importance of T-Bill Calculations

Details: Accurate T-Bill calculations are essential for investors to compare returns, plan cash flows, and make informed investment decisions in short-term government securities.

4. Using the Calculator

Tips: Enter purchase price in dollars, yield as a decimal (e.g., 0.05 for 5%), and days to maturity. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why use 360 days instead of 365?
A: The 360-day year is a banking convention that simplifies interest calculations for short-term instruments like T-Bills.

Q2: How is T-Bill yield different from interest rate?
A: T-Bills don't pay periodic interest. Yield reflects the discount from face value and is annualized for comparison purposes.

Q3: What are typical T-Bill maturities?
A: Common maturities are 4, 8, 13, 26, and 52 weeks, though the calculator works for any duration.

Q4: Are T-Bill returns guaranteed?
A: Yes, T-Bills are backed by the full faith and credit of the U.S. government, making them among the safest investments.

Q5: How are T-Bill yields taxed?
A: Interest income from T-Bills is subject to federal income tax but exempt from state and local taxes.