Commercial Paper Discount Calculator

Work out commercial paper discount instantly with clear inputs, formula shown and shareable results.

About Commercial Paper Discount Calculator

Commercial paper is issued at a discount and redeemed at face value, so the issuer's cost is the discount rather than a coupon. The effective annual yield exceeds the quoted discount rate because of intra-year compounding.

Formula

Commercial paper price

Price = face / (1 + rate × days/365); effective yield = (face/price)^(365/days) - 1

Worked example

With the default values below, Commercial Paper Discount Calculator returns Issue Price of $98,208,039.61. Change any input above and every figure here is recalculated in your browser.

Inputs used

Face Valueminimum 0: 100,000,000
Discount Rateaccepts 0–100 %: 7.4 %
Tenor In Daysaccepts 1–365: 90

Results

Issue Price: $98,208,039.61
Discount: $1,791,960.39
Effective Annual Yield: 7.6089%
Proceeds As Share Of Face Value: 98.2080%

Step by step

1Values used
2Commercial paper price
3Issue Price= 98,208,039.61
4Discount= 1,791,960.39
5Effective Annual Yield= 7.6089
6Proceeds As Share Of Face Value= 98.2080

Assumptions and limits

The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

Frequently Asked Questions

Why do issuers use commercial paper?

It is usually cheaper than bank borrowing for highly rated names and can be issued quickly in size.

What is the main risk to the issuer?

Rollover risk. Paper matures constantly and must be refinanced, which fails precisely when credit conditions tighten.