T Bill Return On Investment Calculator

T-Bill Return Formula:

\[ Return = \frac{(Face\ Value - Purchase\ Price)}{Purchase\ Price} \times 100 \]

Return On Investment:

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1. What is T-Bill Return On Investment?

The T-Bill Return on Investment calculates the percentage return earned on a Treasury bill investment based on the difference between its face value and purchase price.

2. How Does the Calculator Work?

The calculator uses the T-Bill return formula:

\[ Return = \frac{(Face\ Value - Purchase\ Price)}{Purchase\ Price} \times 100 \]

Where:

$ Face\ Value $ — The amount the T-bill will be worth at maturity
$ Purchase\ Price $ — The price paid for the T-bill

Explanation: The formula calculates the percentage gain relative to the purchase price.

3. Importance of ROI Calculation

Details: Calculating ROI helps investors compare different T-bill investments and assess their profitability relative to other investment options.

4. Using the Calculator

Tips: Enter the face value and purchase price in dollars. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical T-bill return?
A: T-bill returns vary based on maturity and market conditions, typically ranging from 1-5% annually.

Q2: How does this differ from annualized return?
A: This calculates simple return. For annualized return, you'd need to factor in the holding period.

Q3: Are T-bill returns taxable?
A: Yes, the difference between purchase price and face value is subject to federal income tax.

Q4: What's the minimum investment for T-bills?
A: The minimum purchase is $100 for most Treasury bills.

Q5: Can this formula be used for other investments?
A: Yes, this basic ROI formula works for any investment where you know the purchase price and final value.