does anyone know the equation to calculate the annual interest on a 3 month tbill. its not as simple as 4X th

Question

it is not as simple as 4x the 3month rate because of compounding

Answer 1

I think you can just take the face amount - your purchase price, and the difference is your interest.

Then take the interest, divide by the face amount, multiply by 4 and that's your annual yield.

(This works because you don't have a 3-month note, you have a 13-week note. 13 x 4 = 52.)

Answer 2

I can do it on my calculator, and it's an easy formula to find in the financial formulas in Excel.

But if you only need to figure out 3 months worth, you can do it by hand. Just take the annual rate of interest divided by 12, and apply it to your principal amount. Add the interest for one month to the principal for the next month, and do it twice more.

Or, here's a link that can do it for you: http://www.moneychimp.com/calculator/compound_interest_calculator.htm