Veronica is considering the purchase of a $100 000 T-bill for $98 112 and settlement in 91 days. What is the tax situation for this purchase if she holds it to maturity and her tax rate is 30 percent?

Question

Quizplus · Accepted Answer

The interest earned is the difference between the purchase price and the maturity value, which is $100,000 - $98,112 = $1,888. This amount is considered interest income and is taxable at her tax rate of 30 percent.

Veronica Is Considering the Purchase of a $100 000 T-Bill