How to Use the TBILL Functions in Microsoft Excel for Treasury Bill Valuation

Treasury bills (T-bills) issued by sovereign governments are among the most liquid, risk-free debt securities in global capital markets. Unlike long-term bonds that pay semi-annual coupons, T-bills mature within one year (commonly 4-week, 8-week, 13-week, 26-week, and 52-week terms) and are sold at a discount to their $100 or $1,000 face value. Because money market conventions quote T-bills on a 360-day bank discount basis rather than standard bond yields, evaluating them requires specialized mathematics. Microsoft Excel provides three dedicated functions—TBILLPRICE, TBILLYIELD, and TBILLEQ—tailored specifically to Treasury bill pricing and yield equivalence.

Overview of the Three Excel TBILL Functions

Each function calculates a vital pricing or yield metric for short-term government debt:

• TBILLPRICE: Computes the price per $100 face value of a Treasury bill when its quoted discount rate is known.
• TBILLYIELD: Computes the annualised discount yield of a Treasury bill when its purchase price is known.
• TBILLEQ: Calculates the Bond-Equivalent Yield (BEY). Because T-bills trade on an Actual/360-day discount convention while standard coupon bonds trade on an Actual/365-day basis, TBILLEQ converts the T-bill yield into an annualized coupon-equivalent rate so you can directly compare short-term bills against long-term bonds.

Part 1: The TBILLPRICE Function

The TBILLPRICE function calculates the cost per $100 face value of a T-bill.

Syntax

=TBILLPRICE(settlement, maturity, discount)

Parameter Definitions

• settlement (Required): The transaction settlement date (the date you acquire the bill).
• maturity (Required): The maturity date when the bill expires and redeems at par. The maturity date must be within one year of the settlement date.
• discount (Required): The Treasury bill’s annual discount rate (entered as a percentage or decimal, e.g. 5.15% or 0.0515).

Practical TBILLPRICE Example

Suppose you plan to purchase a 6-month Treasury bill with the following parameters:

• Settlement Date: 15 March 2026 (Cell A2)
• Maturity Date: 15 September 2026 (Cell B2)
• Quoted Discount Rate: 5.20% (Cell C2)

To determine the purchase price per $100 par value, enter in cell D2:

=TBILLPRICE(A2, B2, C2)

Excel outputs $97.34. If an institutional fund purchases $1,000,000 in face value, the actual cash outlay required on settlement day is $1,000,000 * (97.34 / 100) = $973,400.

Part 2: The TBILLYIELD Function

The TBILLYIELD function calculates the annualized yield of a T-bill based on its purchase price.

Syntax

=TBILLYIELD(settlement, maturity, pr)

Parameter Definitions

• settlement (Required): The transaction date.
• maturity (Required): The maturity date (must be $\le 1$ calendar year from settlement).
• pr (Required): The purchase price of the Treasury bill per $100 face value.

Practical TBILLYIELD Example

Using the same dates (15 March 2026 to 15 September 2026) where an investor buys the bill for $97.34:

=TBILLYIELD(A2, B2, 97.34)

Format the result as a percentage with two decimal places. Excel returns 5.20%, confirming the annualized discount yield.

Part 3: The TBILLEQ Function (Bond-Equivalent Yield)

Standard bank discount yields understate the true economic return because they assume a 360-day year and divide the discount by face value ($100) rather than the actual cash invested. The TBILLEQ function calculates the Bond-Equivalent Yield (BEY), enabling direct comparisons with conventional Treasury notes and corporate bonds.

Syntax

=TBILLEQ(settlement, maturity, discount)

Practical TBILLEQ Example

Using the 5.20% discount rate from our earlier example:

=TBILLEQ(A2, B2, C2)

Excel outputs 5.42%. The true annualized return on the actual capital invested is 5.42%—substantially higher than the quoted 5.20% bank discount rate.

Summary Comparison Table

Function	Input Required	Output Produced	Primary Use Case
TBILLPRICE	Dates, Discount Rate	Price per $100 face value	Determining capital required to buy T-bills
TBILLYIELD	Dates, Purchase Price	Annualized discount rate	Auditing return on secondary market purchases
TBILLEQ	Dates, Discount Rate	Bond-Equivalent Yield (BEY)	Comparing T-bill yields against standard bonds

Important Modeling Constraints and Error Handling

To avoid unexpected computation errors in financial workbooks:

• One-Year Term Limit: By definition, Treasury bills have terms of one year or less. If (maturity - settlement) > 365 days (or 366 in leap years), all three functions return a #NUM! error. For securities with longer terms, use PRICE, YIELD, or DISC.
• Settlement Chronology: The maturity date must be strictly after the settlement date; otherwise, a #NUM! error occurs.
• Valid Price Bounds: In TBILLYIELD, the purchase price pr must be greater than zero.