# What's the equation for an I Bond? (compounded semi-annually)

• B
In summary, the I Bond is compounded semi-annually with a formula that calculates the overall rate based on the fixed interest rate and bi-annual inflation rate. The composite rate for the first six months is used to calculate simple interest, which is then added to the principal amount and compounded with the composite rate for the next six months. For example, if $1000 worth of I bonds were bought in August 2022 with a composite rate of 9.62% for the first six months and 6% for the next six months, the ending balance after one year would be$10,539. The real equation also includes rounding and denominations of $25. adamaero I Bonds are compounded semi-annually. What's the equation for an I Bond? https://www.wallstreetmojo.com/series-i-bond/ Overall Rate = [Fixed interest rate + (2 x bi-annual inflation rate) + (Fixed interest rate x bi-annual inflation rate)] Say the first 6 months is 9%, the next six months is 6% and the fixed interest rate is 0.1% for both. What is the final rate? Is it the overall rate done twice, added and then divided by two? Last edited: Wait, the composite rate is already 9% as said here: http://eyebonds.info/ibonds/10000/ib_2022_08.html So what equation uses that composite rate of 9% for the first six months. So is that the simple interest rate for six months, and then it's compounded; then that gains simple interest for another six months? Say I bought$1000 worth of I bonds on August 1, 2022. For months 1-6, the overall interest rate is 9.62%.
For months 7-12, say the overall interest rate is 6%.

SI = Principal_1*Rate_1*Time

1000*9.62%*6 = SI

CI = Principal_2*(1 + Rate_2)*Time − Principal_2

SI*(1+6%)*6 - SI

Like this or?

1. For first 6 months: I = PRT. Interest = ($10,000) * (3.54%) * (0.5 years) =$177.
2. For next 6 months: I = PRT. Interest = ($10,177) * (7.12%) * (0.5 years) =$362.
3. 10000(1+[0.5*3.54%+(1+3.54%*0.5)*7.12%*0.5]) = Ending balance = $10,177 +$362 = $10,539. 1.$1000*9%*0.5 = afterSix = 45
2. (1000+afterSix)*6%*0.5 = 31
3. P*(1+[r1*0.5+(1+r1*0.5)*r2*0.5])
= $1076 --- (9%+6%)/2 is close enough :) The real equation uses rounding and denominations of$25:

Last edited:

## 1. What is an I Bond?

An I Bond is a type of savings bond issued by the U.S. Department of the Treasury. It is a low-risk investment that accrues interest over time and can be redeemed for its full face value after a certain period of time.

## 2. How is an I Bond different from other types of bonds?

An I Bond differs from other bonds in that it is inflation-protected, meaning its value is adjusted to keep pace with inflation. It also has a fixed interest rate and can be redeemed for its full face value at any time after 12 months.

## 3. What is the equation for an I Bond?

The equation for an I Bond is: I Bond Value = Face Value + (Semi-annual Interest Rate * Face Value * (n/2)), where n is the number of semi-annual compounding periods.

## 4. How often is an I Bond's interest compounded?

An I Bond's interest is compounded semi-annually, meaning it is calculated and added to the bond's value twice a year.

## 5. How do I calculate the value of an I Bond?

To calculate the value of an I Bond, you can use the equation mentioned above. You can also use the TreasuryDirect Savings Bond Calculator provided by the U.S. Department of the Treasury, which takes into account the current inflation rate and any interest adjustments.

• Precalculus Mathematics Homework Help
Replies
2
Views
2K
• General Math
Replies
2
Views
2K
• General Math
Replies
2
Views
1K
• Calculus
Replies
20
Views
2K
• Precalculus Mathematics Homework Help
Replies
11
Views
3K
• Precalculus Mathematics Homework Help
Replies
7
Views
2K
• Precalculus Mathematics Homework Help
Replies
2
Views
1K
• Precalculus Mathematics Homework Help
Replies
2
Views
2K
• General Math
Replies
2
Views
25K
• Precalculus Mathematics Homework Help
Replies
16
Views
4K