31 CFR 359.14 – How are composite rates determined?
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Composite rates are set according to the following formula (See appendix A to part 359 for examples of calculations involving composite interest rates.):
Fixed rate = 2.00%
Inflation rate = 0.28%
Composite rate = [0.0200 ÷ 2 + 0.0028 + (0.0028 × 0.0200 ÷ 2)] × 2
Composite rate = [0.0100 + 0.0028 + 0.000028] × 2
Composite rate = 0.012828 × 2
Composite rate = 0.025656
Composite rate = 0.0257 (rounded)
Composite rate = 2.57% (rounded)