[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR351.16]

[Page 319]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
         CHAPTER II--FISCAL SERVICE, DEPARTMENT OF THE TREASURY
 
PART 351_OFFERING OF UNITED STATES SAVINGS BONDS, SERIES EE--Table of Contents
 
Subpart B_Maturities, Redemption Values, and Investment Yields of Series 
 
Sec. 351.16  What do I need to know about the base denomination for redemption 

value calculations?

    We base all calculations of interest on a unit with a principal 
amount of $12.50. We use this unit value to determine the value of bonds 
in higher denominations. The effect of rounding off the value of the 
$12.50 unit increases at higher denominations. This can work to your 
slight advantage or disadvantage, depending on whether the value is 
rounded up or down.

    Example. The following hypothetical example illustrates the 
calculation: A rate of 3.25% will result in a newly purchased $12.50 
unit increasing in value after six months to $12.70, when rounded to the 
nearest cent. Therefore, a $5,000 definitive Series EE bond (with a 
principal amount of $2,500) will be worth $2,540 after six months 
([$2,500 divided by $12.50] x $12.70 = $2,540.) In contrast, if applied 
directly to a $2,500 principal amount, the rate would render a value of 
$2,540.63 after six months, a difference of 63 cents. (This example does 
not account for any interest penalty that might apply if you redeem a 
bond less than five years after its issue date.)