31 C.F.R. § 344 app A to Part 344
(a) The amount of the market charge for bonds and notes subscribed for before October 28, 1996 can be determined by the following formula:
(b) The application of this formula can be illustrated by the following example:
(1) Assume that a $600,000 note is issued on July 1, 1985, to mature on July 1, 1995. Interest is payable at a rate of 8% on January 1 and July 1.
(2) Assume that the note is redeemed on February 1, 1989, and that the current borrowing rate for Treasury at that time for the remaining period of 6 years and 150 days is 11%.
(3) The increased annual borrowing cost is $18,000. ($600,000)x(11%-8%)
(4) The market charge is computed as follows:
(c) The amount of the market charge for certificates of indebtedness subscribed for before October 28, 1996 can be determined by the following formula:
(d) The application of this formula can be illustrated by the following example:
(1) Assume that a $50,000 certificate of indebtedness is issued on March 1, 1987, to mature on November 1, 1987. Interest is payable at a rate of 10%.
(2) Assume that the certificate of indebtedness is redeemed on July 1, 1987, and that the current borrowing cost to Treasury for the 123-day period from July 1, 1987, to November 1, 1987, is 11.8%.
(3) The increased annual borrowing cost is $900. ($50,000) * (11.8%-10%)
(4) The market charge is computed as follows:
31 C.F.R. 344 app A to Part 344