Determine the issue price of a 91-day, $100,000 Government of Alberta Treasury Bill that was issued at a discount rate of 5.75% simple interest.
A) $98,587
B) $94,250
C) $96,194
D) $100,000
E) $101,434

Question

Quizplus · Accepted Answer

The issue price of a Treasury Bill can be calculated using the formula: Issue Price = Face Value - (Discount Rate x Face Value x (Days to Maturity/360)). For this T-Bill: Issue Price = $100,000 - (0.0575 x $100,000 x (91/360)) = $100,000 - $1,413 = $98,587.

Determine the Issue Price of a 91-Day, $100,000 Government of Alberta