# How to Calculate the Purchase Price of a Treasury Bill i Brian Kersey/Getty Images News/Getty Images

If you need an ultra-safe place to park money, Treasury bills are what the professionals choose, even though their rates can be quite low. T-bills are short-term securities that mature in a year or less. They are sold in denominations of \$1,000. The discount rate on T-bills changes daily, reacting quickly to developments in the economy and international politics. During the decade from 2002 to 2012, the high rate on 26-week bills was 5.12 percent on July 18, 2006. The low of 0.02 percent occurred on Aug. 26, 2011.

## Step 1

Find the purchase price of a T-bill by calculating the discount over the term of the T-bill. T-bills are quoted according to their discount rates, so you pay less than their \$1,000 face value. When they mature, you receive \$1,000. The difference between what you paid and \$1,000 is your interest earned.

## Step 2

Multiply the rate of discount by the number of days to maturity. If the 26-week T-bill price is quoted at 0.145 percent, multiply .00145 by 182 days. Your answer is 0.2639.

## Step 3

Divide 0.2639 by 360 to get the daily interest factor. In this example, the result is 0.000733. Subtract that number from 1 to get .999267. Multiply the result by 1000 to get the price of the T-bill, which in this case is \$999.27.

## Step 4

Subtract \$999.27 from the face value of \$1,000 to get your interest amount of \$0.73. When the T-bill matures you will receive the full face amount of \$1,000. Obviously, you would have to buy a lot of T-bills to realize a decent gain.