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T. Rowe Price Associates

Frey, Sherwood C. ...

Case

T. Rowe Price Associates

Frey, Sherwood C. Jr.; Case, Edward R.

QA-0295 | Published April 5, 1983 | 8 pages Case

Collection: Darden School of Business

Product Details

Peter Gordon, manager of a $1.6 billion investment in municipal securities at Price, has just received phone calls from the sales representatives of two investment banks, each offering attractive opportunities for the reinvestment of $50 million that will shortly become available. He may choose either but not both of the offers. The case can be used to review the contents of a "tombstone," to reinforce NPV and IRR concepts, to witness the inappropriateness of using IRR as a selection criterion among mutually exclusive projects, and to emphasize the reinvestment assumption of IRR.

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