Calculate the purchase price, gross discount, 15% withholding tax, net interest, and net annualised yield on a Commercial Paper investment.
Commercial Paper is a short-term, unsecured corporate IOU sold at a discount to face value, similar in structure to a Treasury Bill but issued by a company rather than the government — and, unlike government paper, its discount income is taxed. The Commercial Paper Calculator works out the purchase price, discount, withholding tax, and net return on any Commercial Paper investment.
How Is Commercial Paper Priced?
Enter the face value, tenor in days, and the quoted discount rate. The calculator applies the same bank-discount formula used for Treasury Bills — discount equals face value times the rate times the tenor as a fraction of a 365-day year — to find your purchase price: face value minus the discount.
How Does Withholding Tax Change Your Return?
A fixed 15% withholding tax applies to the discount income on all Commercial Paper, deducted before you receive your return. The calculator shows the gross discount, the withholding tax amount, and the net interest that's actually yours to keep, plus a net maturity value — the face value you're paid out, reduced by the tax withheld on the discount.
What Is "Net Annualised Yield"?
Net annualised yield is your after-tax return, expressed as an annual percentage of the amount you actually invested (the purchase price, not face value) — the number to use when comparing Commercial Paper against other short-term instruments like Treasury Bills or fixed deposits, since it already accounts for both the discount pricing and the tax bite.
Why Isn't There a Public Reference Price?
Commercial Paper is privately issued between a company and its investors, so unlike Treasury Bills there's no published CBK auction result to check your figures against. Sanity-check any large investment by working through the arithmetic by hand — face value, discount, purchase price, tax, and net return — using the exact terms your issuer has quoted, and confirm the 15% withholding tax still applies before committing funds.
Is Commercial Paper interest taxed in Kenya?
Yes — a fixed 15% withholding tax applies to the discount income earned on Commercial Paper, deducted before the net return reaches the investor.