Abstract
Peter Gordon, manager of a $1.6-billion investment in municipal securities, 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. This 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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