Page 1

Krause Fund Research Fall 2009

T. Rowe Price Group Inc.

Krause Fund

(NASDAQ: TROW) November 13, 2009

Recommendation: BUY Analysts

Current Price Target Price Range

Herbert Hicks herbert-hicks@uiowa.edu Jonathan Frank jonathan-frank@uiowa.edu

T. Rowe is Positioned to Grow

Company Overview T. Rowe Price Group, Inc. (TROW) is an asset management firm that specializes in equity, fixed income, blended asset, and money market mutual funds. They have both individual and institutional investors. TROW was founded in 1937 and went public in 1986 on the NASDAQ stock exchange. Their investment approach is centered on low cost funds and low cost portfolio management.

Stock Performance Highlights 52 week High 52 week Low Beta Value Average Daily Volume

$55.48 $20.09 1.67 2.40 m

Share Highlights Market Capitalization Shares Outstanding Book Value per share EPS (2010E) P/E Ratio Dividend Yield Dividend Payout Ratio

$13.42 b 257.5 m $10.65 $2.44 21.2 1.94% 59.5%

Company Performance Highlights ROA ROE Sales

$51.03 $55-$58

17.27% 14.96% $1.86 b

• Roughly 78 million American’s in the Baby Boomer generation are nearing retirement. The U.S. Census Bureau estimates that the 65 years and older population will almost double by the year 2030 (2008 U.S. Population Estimates – Census). This demographic is likely to save more money to prepare for retirement and replenish shrunken 401(k) and IRA accounts. • T. Rowe Price has very low expense ratios compared to peers which will lead to a gain in market share over their competitors. 80% of their mutual funds have beaten their Lipper leader average for 3-, 5-, and 10-year periods (TRowePrice.com). T. Rowe Price’s mutual funds are a much cheaper, and often better performing, alternative to their larger peers. • With high levels of excess cash, the firm is easily positioned to further diversify globally, which is one of the primary goals of their management. T. Rowe Price recently acquired a 26% stake in UTI Asset Management, an Indian mutual fund manager with a 10% market share in Indian mutual fund assets. • T. Rowe Price has relatively low levels of assets under management compared to peers. While this may seem as a disadvantage, they are poised for growth.

One Year Stock Performance

Financial Ratios Current Ratio Debt to Equity

3.742 0.00%

Figure 1 Important disclosures appear on the last page of this report.


Investment Recommendation

UNEMPLOYMENT & NON-FARM PAYROLL (2000-present) MONTHLY % CHANGE & CHANGE IN THOUSANDS

We have determined that shares of T. Rowe Price Group Inc’s equity are undervalued at their current market price and therefore we are assigning a BUY recommendation with a target price range of $55-$58. T. Rowe Price specializes in mutual funds, 401(k)’s and other retirement planning products and services. There are roughly 78 million American’s born between 1946 and 1964 more commonly known as the Baby Boomer generation (2008 Population Estimates – Census). We believe the aging American population will continue to invest more money in retirement savings and specifically in mutual funds.

Company Overview Figure 2 T. Rowe Price is an asset management and investment advisory firm for both individual and institutional investors. They specialize in retirement planning and currently have $366.2 Billion in assets under management (AUM); primarily in equity mutual funds, blended asset mutual funds, money market mutual funds, and fixed income mutual funds (Oct 23, 2009 - 10Q). The majority of their income derives from fees charged on their AUM. In light of the recent recession, asset values have declined significantly which left TROW’s asset managers with lower levels of AUM. A decline in AUM means a smaller pool of assets on which to charge fees, which has hurt T. Rowe’s top line for 2009. However, the considerable stock market rally since March has helped their fund values grow once again and encouraged investors to resume investing. Over 70% of T. Rowe’s mutual funds are in equities so the recent return to higher risk investments has definitely benefited T. Rowe (2008 Annual Report).

Stabilization of the financial system was the initial step that helped bring confidence back to economy and spur a rally in the stock market. However, unemployment has continued to rise. In the first quarter of 2009 roughly 2,074,000 Americans lost their jobs and unemployment has since risen to 10.2% (Figure 2). However, unemployment has been rising at a slower rate, indicating it may be nearing its highs and will soon report job increases. Confidence has returned to the market as job losses slow and stocks continue to rise (Figure 2). We believe unemployment will top out soon, somewhere between 10.5% - 10.75%. HOUSING STARTS (1999-present)

Economic Overview In late 2009, we find ourselves in the wake of the most severe financial crisis since the Great Depression of the 1930’s. The stock market rally that began in March has continued as the economy appears to be recovering. Large financial institutions can be blamed for predatory lending practices, credit rating agencies are at fault for not correctly pricing risk, insurers for not holding large enough reserves for credit default swaps (CDS’s), and regulators for letting these practices continue until the inevitable losses and failures eventually occurred.

Figure 3 Housing starts have stopped their freefall and appear to be in a bottoming out process (Figure 3). This indicates that people are beginning to build and buy houses again. The increase in housing starts will help support home values and mortgagebacked security (MBS) values. Home values are also being supported by historically low interest rates, government provided tax incentives, and Federal Reserve purchasing “toxic assets”.

Important disclosures appear on the last page of this report.


Housing starts are likely to decline in the near future and rise again in the spring, which is typically the time of year that many people purchase or begin building homes. If the new home-buyer tax credit was extended into 2010 there would likely be a large increase in housing starts. An increase in this economic indicator is important because more new housing means more construction, which leads to lower rates of unemployment.

economic growth. He has made it well known that he would much prefer short term inflation by leaving rates low than to cause another depression by raising rates too soon and hindering an economic recovery. GDP QUARTERLY % GROWTH (2006:Q3-2009:Q3)

1, 10, 30 YEAR TREASURY YIELDS (1989-present)

Figure 6

Figure 4 Treasury interest rates are at historically low levels (Figure 4). These low interest rates promote economic activity because people are able to inexpensively finance home and vehicle purchases and businesses are able to borrow at low rates, enabling them to fund their operations. We believe interest rates will remain low and the Federal Reserve Board will not begin to increase them until mid- to late-2010. CPI MONTHLY % CHANGE (09/2007-09/2009)

Figure 5 The consumer price index (CPI) is generally used as a measure of inflation. We believe Ben Bernanke will keep interest rates low until mid- to late-2010 to help spur

Though the low rates are supposed to promote economic activity, GDP has not had a significant rebound (Figure 6). The sizeable third quarter increase in GDP is largely attributable to automobile sales that were abnormally high in response to the government sponsored “Cash for Clunkers” program. Though we expect GDP to improve, it will likely be at a slow pace. Relative to America’s recent past, spending it is still very weak in what is primarily a consumer driven economy. However, we believe that the American consumer has a short term memory, and spending will continue to improve with increasing asset values and eventual decreases in the unemployment rate. However, because credit is not as easily available as it once was consumer spending will likely increase at a gradual pace.

Relevant Stock Market Prospects The total net assets in money market mutual funds (in America) have declined 10.8% from $3,904B during the week of March 11, 2009 to $3,482B during the week of September 16, 2009 (ICI – Money Market Funds). This move coincides with a 48.2% increase in the S&P 500 Index from March to present, implying that investors are seeking more risky investments and moving away from low-risk, low-return funds (Yahoo Finance). T. Rowe Price specializes in equity mutual funds which have directly benefited from the recent increases in stock values. We believe the S&P 500 index rally is the result of two main things. First, the stock market was exceptionally oversold in February and March due to investors panicking and massive deleveraging of investment portfolios. Second, economic indicators are now continually beating estimates and so are many corporate earning announcements. Investors and asset managers have a renewed sense of confidence about the economy and will continue to invest money into equities. In the next 12 months we see the S&P 500 index

Important disclosures appear on the last page of this report.


returning 8%-10%. This corresponds to a slightly better return than the geometric average of the S&P 500 from 19502007. We believe it will be slightly better than average because the Federal Reserve Board is keeping rates low to spur economic growth and many governments around the world have economic stimulus packages in effect.

Review of T. Rowe Price and its  Business Industry Analysis and Outlook T. Rowe Price is in the asset management sub-industry of the investment services industry. Asset management firms typically have less leverage than banks if any at all. They provide advice to individuals and institutions on how and where to allocate funds, and they also provide investment vehicles such as mutual funds.

The massive financial holding companies are essentially one-stop shops for clients (banking services, investment advisory services, security brokers, insurance brokers). Their large size and huge clientele base provides these firms with a competitive advantage over smaller, niche firms. The majority of asset managers’ income is derived from fees. Hedge funds have performance fees and managers have to beat previous years’ asset values to charge investors these fees the following year. Mutual fund managers typically do not have these high water marks and charge expense ratios as a percentage of total assets under management. This incentivizes mutual fund managers to continually increase returns on their funds each year, and to attract new investors. Many mutual funds charge an initial “load” to investors when they first enter a fund. However, these loads are becoming less common as mutual funds compete with each other and ETF’s. T. Rowe Price offers over 90 mutual funds, none of which charge an initial load fee (TRowePrice.com). ASSETS UNDER MANAGEMENT ($B)

65 YEARS AND OVER POPULATION GROWTH

Figure 8

Figure 7 The 65 years and over population is projected to almost double by the year 2030. As the nearly 78 million American’s in the Baby Boomer generation are nearing retirement, they will begin saving a larger portion of their incomes. This trend should be very beneficial to asset managers. Asset management firms today face two main competitors; large diversified financials and ETF’s (exchange traded funds). ETF’s emerging popularity also creates competition for asset managers. They are highly liquid and require low fees for investors. Mutual funds are being forced to charge lower expense ratios because of ETF’s. Hedge funds are also considered competition for T. Rowe Price but they cater primarily to high-net worth individuals, they cannot advertise their services, and these funds are structurally very different from T. Rowe Price’s mutual funds.

Many financial firms have used acquisitions to grow their operations and T. Rowe Price is no exception. They recently acquired a 26% stake in UTI Asset Management, an Indian mutual fund firm. However, unlike many financial firms, T. Rowe did not diversify from their core business model or acquire firms in other financial industries outside of asset management.

Company Specific Analysis T. Rowe Price provides asset management services for both individuals and institutional clients. These services are primarily aimed towards financial planning for retirement. They offer a large selection of equity, debt, blended asset, and money market mutual funds. T. Rowe also offers 401(k) plans, individual retirement accounts, college savings plans, and online brokerage services. They experience direct competition with other asset management and investment service firms such as State Street, Legg Mason, Franklin Resources, Apollo Investment Corporation and others. These firms compete between fund returns, low management fees, and offering other investment products, such as ETF’s. T. Rowe Price also has some competition between large financial holding companies such

Important disclosures appear on the last page of this report.


as JP Morgan, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs. These large financials are diversified and have their own asset management subsidiaries. Due to the recent popularity of ETF’s, T. Rowe Price’s assortment of mutual funds has competition with these lower cost and more liquid products. The nation’s total net assets in ETF funds was $639.93B in July 2009 (up 8.4% from June) while the total assets in mutual funds was $10.43T (up 3.9% from June) (ICI – Mutual Funds; ICI – ETF’s). This means that the total amount of assets in ETF’s is only 6.1% of the amount of assets invested in mutual funds, or a ratio of 16.3 to 1. We believe that ETF’s are popular among traders, but they do not greatly threaten T. Rowe’s business. Many people planning their retirement simply do not have the time, or do not feel comfortable actively investing their life savings and prefer to trust an advisor. Older investors that may not be computer savvy are also much less likely to try investing in ETF’s from home over mutual fund investing. Though ETF popularity will probably continue for some time, we see a larger market for mutual funds, specifically for people planning their retirements.

T. Rowe Price has a debt-free and highly liquid balance sheet with $739.3MM in cash (Oct 23, 2009 – 10-Q). Their largest expense is employee compensation, but their balance sheet allows them to keep employees during poor economic times because they do not have interest payments on debt. We believe their strong balance sheet enabled them to keep many more employees than their competitors.

Future Prosects and Opportunities ‐ ‐ SWOT Analysis Strengths (internal) 

 EXPENSE RATIOS: MUTUAL FUND AVE. VS TROW

T. Rowe Price has a much lower expense ratio than their peer average. The recent popularity of ETF’s has forced many mutual fund managers to continually reduce their expense ratios, and effectively their revenues, to remain competitive. TROW charges approximately 30 basis points less than the mutual fund average, and is in a great position to take market share from competitors. T. Rowe Price has a strong balance sheet with no debt and high levels of excess cash. This gives them the freedom to invest in profitable opportunities without having to raise capital (i.e. the recent $138m investment in UTI Asset Management). They can also afford to continually increase their dividend, as they have done in the past. Their clients are institutional investors and individuals planning for their retirements. These investors are less cyclical and are less likely to leave T. Rowe’s mutual funds and chase returns in other investments. These clients have very long term goals and the assets they invest with T. Rowe products are stable.

Weaknesses (internal) 

Figure 9 Aside from mutual funds, T. Rowe Price offers online brokerage services and therefore faces competition with other online discount brokers (E*Trade, Scottrade, etc). T. Rowe Price is also somewhat globally diversified and plans to acquire more overseas investors in the future. Currently, investors outside America account for roughly 10% of T. Rowe Price’s AUM (2008 Annual Report). As of October 23, 2009 T. Rowe Price had $366.2B in Assets Under Management. This is up 32.5% from $276.3B at year-end 2008 but still down from $400B at 2007 year-end (June 30, 2009 – 10-Q). As equity values increase and investors continue to allocate more money into mutual funds and withdraw less, AUM will continue to increase, resulting in higher revenues and higher net income.

Firm size is somewhat of a problem for T. Rowe Price, though they have a roughly $12B market cap (Yahoo Finance). They are not as large as some other asset management firms and have lower AUM levels than some of their competitors (Figure 8). T. Rowe’s online broker doesn’t offer competitive pricing relative to other discount brokers. However, this does not present a huge problem because we feel the extreme discount brokers are mainly targeting daytraders that trade in large volumes with high frequency. T. Rowe’s target clients are investors concerned about long term equity appreciation and not short term gains.

Opportunities (external) 

America has an aging population, which will lead to increased retirement financial planning. Baby boomers are planning for retirement and will need services provided by T. Rowe Price.

Important disclosures appear on the last page of this report.


Equity, bond and commodity rallies beginning in early 2009 have helped give investors confidence. More specifically, in the months since the largest outflows from mutual funds in recent history ($128 billion of outflows in October 2008), inflows to mutual funds are once again positive (ICI – Mutual Funds). There is a prevailing trend of employers not wanting the investment risk of pension funds. These employers will continue to offer employees 401(k) plans instead to transfer risk onto the individual and away from the firm. The Pension Protection Act of 2006 let employers automatically enroll their employees in 401(k) plans (which are primarily invested in mutual funds) which is also likely to increase mutual fund investing in the future (NetAdvantage – Industry Trends). The potential for increased government regulation will likely affect the large financial holding companies that do business over many financial industries and those regulations are unlikely to affect niche firms, like T. Rowe Price, that have one primary area of business and are not diversified among numerous financial fields (e.g. insurance, investment banking, commercial banking, asset management). If anything, T. Rowe Price will benefit from good employees leaving these large institutions in search of better jobs and compensation.

Threats (external)  

An emerging popularity in ETF’s could lead to a decrease in mutual fund investing, though the market for mutual funds is much larger. With the uncertainty about the job market, American’s are saving more money in case they are laid off or fired (Spors). However, the recent movement of assets out of money market funds and into equity funds demonstrates that investors are beginning to once again desire more risky investments (ICI – Mutual Funds; ICI – Money Market Funds).

Valuation Analysis

cannot be found on the balance sheet; it is the people that manage the portfolios. Since T. Rowe Price does not require hard assets to generate returns, their ROIC only appears to be unreasonably high. The second method used to calculate a share price was a dividend discount model (DDM). In this approach we took the dividends we derived in our income statement projections and discounted them, along with a future share price, to their present value. T. Rowe’s implied intrinsic value using the DDM approach is $70.57, also suggesting the shares are currently undervalued. The third method used was a combination of a relative price to earnings (P/E) analysis and a price to earnings growth (PEG) analysis. We used analyst estimated earnings per share and projected growth rates to find an industry average P/E and PEG multiples. Using these two approaches we calculated T. Rowe Price’s implied intrinsic value to be approximately $50.02, suggesting that the firm’s equity is slightly overvalued. After taking into account the different approaches, we arrived at the estimated fair price range of $55.00-$58.00 for TROW.

Weighted Average Cost of Capital T. Rowe Price’s weighted average cost of capital (WACC) was calculated using an estimated beta, cost of debt, market value of equity, market value of debt, and their effective tax rate. The effective tax rate can easily be found in their 10-K statements and T. Rowe’s market value of equity was calculated by taking the current share price multiplied by the number of shares currently outstanding. Their beta was estimated by calculating the covariance of TROW’s weekly returns with those of the S&P 500 index for two years, which equals 1.67. High betas, like this one, tend to drift toward 1.0 over time. The intuition behind this is that firms become less risky over time. We calculated T. Rowe Price’s two year, weekly beta over the last 18 years and it becomes apparent that it drifts towards 1.0 as time progresses. We incorporated this into our model by reducing the beta each year to a continuing value beta of 1.25. 2-YEAR WEEKLY ROLLING BETA

Target Price We used four different methods to arrive at our target price range of $54.00-58.00 for T. Rowe Price. The first two methods used were the discounted free cash flow (FCF) and the economic profit (EP) method. If both are calculated correctly then they will arrive at the same estimated share price. The two key factors that must be calculated are the net operating profit less adjusted taxes (NOPLAT) and the amount of invested capital (IC). Using these two methods, we arrived at a share price of $56.26 suggesting that T. Rowe Price is undervalued at the current market price of $51.03. T. Rowe Price’s return on invested capital (ROIC) is relatively high compared with other firms. The reason behind their high ROIC is because of the way that invested capital must be calculated. T. Rowe Price’s real invested capital

Important disclosures appear on the last page of this report.

Figure 10


T. Rowe has no debt, but they do have operating leases that can be located off their balance sheet. To estimate T. Rowe’s cost of debt, we used the cost of debt from a firm in the same industry with an almost identical capital structure (BEN). The market value of debt was calculated using the present value of their contractual operating lease obligations.

Assets Under Management Asset under management (AUM) inflows were calculated by using the average inflows as a percentage of total AUM for the past five years. This average was then used for the first estimated period, and then declined to a continuing value percentage in the last year of the model. We believe this is a fairly conservative approach because T. Rowe Price’s capital inflows could easily remain high well beyond the forecasting period of this analysis. Increases in stock fund values were assumed to be equal to the historic geometric average return of the S&P 500 index from 1950-2007. We assumed the return on bonds to be equal to the current risk free rate. This approach is conservative because T. Rowe invests in assets with yields higher than the risk free rate, and because interest rates are currently at historic lows and will almost certainly have to rise in the future. Other portfolios returns were estimated to be an average of equity and fixed income returns. This is also a conservative estimate because T. Rowe Price’s other portfolios are more heavily weighted in equities. AUM INFLOWS AND INCREASES (DECREASES)

Sensitivity Analysis CV Growth and CV Beta $ 56.26 5.50% 5.75% CV Growth 6.00% 6.25% 6.50%

1.33 $ 48.62 $ 50.21 $ 51.96 $ 53.89 $ 56.05

1.28 $ 50.86 $ 52.63 $ 54.59 $ 56.78 $ 59.23

CV Beta 1.25 $ 52.26 $ 54.16 $ 56.26 $ 58.62 $ 61.26

1.23 $ 53.31 $ 55.30 $ 57.52 $ 60.00 $ 62.80

1.18 $ 56.02 $ 58.27 $ 60.78 $ 63.62 $ 66.84

Figure 12 Our continuing value growth may seem fairly high. We came to this growth rate by first calculating the growth of NOPLAT using continuing value ROIC multiplied by a retention ratio. This gave us a continual growth rate of 6.84%. We also used a weighted average of T. Rowe’s AUM returns and calculated a value of 6.66%. This would imply a continuing value growth rate of 6.66% from asset appreciation and no new net inflows of capital. Realizing that these values were so high, we instead decided to use a continuing value growth rate of 6.00%.

Market Risk Premium $ 56.26 4.80% 4.90% Mkt Risk Prem. 5.00% 5.10% 5.20%

1.35 $ 54.21 $ 52.46 $ 50.81 $ 49.25 $ 47.77

1.30 $ 57.01 $ 55.15 $ 53.40 $ 51.74 $ 50.16

CV Beta 1.25 $ 60.12 $ 58.13 $ 56.26 $ 54.49 $ 52.82

1.20 $ 63.59 $ 61.47 $ 59.46 $ 57.57 $ 55.77

1.15 $ 67.50 $ 65.21 $ 63.05 $ 61.01 $ 59.08

Figure 13 The general consensus among Krause Fund analysts is that the market risk premium should be somewhere between 4.50% and 5.00%. We chose to use 5.00% for our analysis to take a more conservative approach. If we had used a market risk premium of 4.50% it would suggest that TROW is even more undervalued that our previous calculations imply.

CV Asset Inflows Figure 11

Expense Ratios We calculated expense ratios by taking the revenue earned from each asset class and dividing it by the average AUM in the respective asset class.

CV Inflows

56.26 0.00% 0.50% 1.00% 1.50% 2.00%

$ $ $ $ $

1.35 48.82 49.81 50.81 51.83 52.86

$ $ $ $ $

1.30 51.29 52.34 53.40 54.48 55.57

CV Beta 1.25 $ 54.03 $ 55.14 $ 56.26 $ 57.41 $ 58.57

$ $ $ $ $

1.20 57.08 58.26 59.46 60.68 61.92

$ $ $ $ $

1.15 60.50 61.77 63.05 64.36 65.68

Figure 14 We believe T. Rowe Price will benefit from positive inflows and that this will be a continuing trend because of the aging American population. The 1.00% used in our model may be too small, but if we used a larger number we would

Important disclosures appear on the last page of this report.


also have to assign a higher corresponding continuing value beta, which would translate to a similar share price.

Stock and Bond Yearly Returns

Bond

56.26 3.50% 4.00% 4.36% 4.50% 5.00%

$ $ $ $ $

6.00% 49.15 49.76 50.21 50.38 51.02

$ $ $ $ $

7.00% 52.45 53.07 53.53 53.71 54.37

Stock 7.78% $ 55.16 $ 55.80 $ 56.26 $ 56.45 $ 57.11

$ $ $ $ $

8.00% 55.94 56.58 57.05 57.24 57.91

$ $ $ $ $

9.00% 59.65 60.31 60.79 60.98 61.66

Figure 15 Stock portfolio returns are assumed to the equal to the average geometric return of the S&P 500 index from 19502007. The bond portfolio returns are assumed to be equal to the current market risk free rate of return.

Important Disclaimer This report was created by students enrolled in the Security Analysis (6F:112) class at the University of Iowa. The report was originally created to offer an internal investment recommendation for the University of Iowa Krause Fund and its advisory board. The report also provides potential employers and other interested parties an example of the students’ skills, knowledge and abilities. Members of the Krause Fund are not registered investment advisors, brokers or officially licensed financial professionals. The investment advice contained in this report does not represent an offer or solicitation to buy or sell any of the securities mentioned. Unless otherwise noted, facts and figures included in this report are from publicly available sources. This report is not a complete compilation of data, and its accuracy is not guaranteed. From time to time, the University of Iowa, its faculty, staff, students, or the Krause Fund may hold a financial interest in the companies mentioned in this report.

Important disclosures appear on the last page of this report.


Source Citations T. Rowe Price.com. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.troweprice.com/ “Oct 23, 2009. 10-Q”. T. Rowe Price. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.troweprice.com/ “2008 Annual Report”. T. Rowe Price. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.troweprice.com/ “Historical weekly money market data”. Investment Company Institute. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.ici.org/pdf/mm_data_2009.pdf “Exchange-Traded Fund Assets - June 2009”. Investment Company Institute. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.ici.org/research/stats/etf/etfs_07_09 “Trends in Mutual Fund Investing - July 2009”. Investment Company Institute. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.ici.org/research/stats/trends/trends_07_09 Yahoo Finance. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.finance.yahoo.com Spors, Kelly K. “Stop Me Before I Spend.” The Wall Street Journal. November 13, 2009. “Industry Trends”. NetAdvantage. Investment Services. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.netadvantage.standardpoor.com/NASApp/NetAd vantage/showIndustrySurvey.do?code=ivs “2008 Population Estimates”. U.S. Census Bureau. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.census.gov/

Library, Iowa City, http://www.stlouisfed.org

IA.

November

13,

2009.

Figure 3: “Housing Starts: Total: New Privately Owned Housing Units Started.” Board of Governors of the Federal Reserve System. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.stlouisfed.org Figure 4: “1-Year Treasury Constant Maturity Rate.” “10Year Treasury Constant Maturity Rate.” “30-Year Treasury Constant Maturity Rate.” Board of Governors of the Federal Reserve System. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.stlouisfed.org Figure 5: “Consumer Price Index: Monthly Change.” Board of Governors of the Federal Reserve System. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.stlouisfed.org Figure 6: “Gross Domestic Product: Quarterly Percentage Change.” Board of Governors of the Federal Reserve System. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.stlouisfed.org Figure 7: Analyst Made Chart: “2008 Population Estimates”. U.S. Census Bureau. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.census.gov/ Figure 8: Analyst Made Chart: “1999-2008 10-K” for TROW, BEN, LM, BLK. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.sec.gov/edgar/ Figure 9: Analyst Made Chart: Trends in the Fees and Expenses of Mutual Funds”. Investment Company Institute. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.ici.org/research/stats/trends/ Figures 10, 11, 12, 13, 14, and 15 are analyst created charts based on calculations made in the analysis.

Figure Citations Figure 1 : Yahoo Finance. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.finance.yahoo.com Figure 2: “Civilian Unemployment Rate.” “Total Non-Farm Payrolls: All Employees.” Board of Governors of the Federal Reserve System. University of Iowa, Pomerantz Business

Important disclosures appear on the last page of this report.


T Rowe Price Group Inc Key Assumptions of Valuation Model Ticker Symbol Current Share Price

Herbert Hicks Jonathan Frank Team Alpha -- CME Group TROW 51.51

WACC WACC (Current) WACC (CV)

12.58% 10.51%

Beta Target Beta CV ROIC CV Growth CV Growth (calculated) CV Growth (AUM growth)

1.67 1.25 42.70% 6.00% 6.84% 6.66%

OTHER Normal Cash Compensation Expense as an average % of revenue Inflation Estimate Marginal Tax Rate Dividend historical average growth rate After 5 years Dividends increase at lower rate Investments in sponsored mutual funds as % of AUM PP&E increases at historical average rate (decreases over time) Depreciation Expense is a % of net PP&E Occupancy costs, Oper. Leases, and Other Contractual Obligations increase with PPE (estimated number)

28.55% 36.22% 3.00% 38.3% 18% 12% 0.1816% 9.64% 14.02%

Cost of Debt Cost of Equity Risk Free Rate (30Yr T-Bond Yield) Market Risk Premium

4.28% 12.70% 4.36% 5.00%

AUM Stock and Blended Asset Exp Ratio Bond and Money Market Exp Ratio Other Portfolio Exp Ratio Admin Fees and Other Income

0.61% 0.44% 0.37% 0.10%

AUM inflows as average % of AUM CV AUM inflows

7.42% 1.00%

Stock and Other Portfolio AUM return Bond AUM return Other Portfolio AUM return

7.78% 4.36% 6.07%


T Rowe Price Group Inc Income Statement Fiscal Years Ending 12/31 2007

2008

2009E

2010E

2011E

2012E

2013E

2014E

2015E

2016E

2017E

2018E

Revenues Investment advisory fees income Stock and blended asset Bond and money market Other portfolios Total investment advisory fees Administrative fees & other income Total revenues

1,168,700 184,600 525,800 1,879,100 348,100 2,233,100

1,031,400 207,400 522,200 1,761,000 353,900 2,121,300

835,901 223,706 469,762 1,529,369 332,515 1,861,884

1,072,288 260,711 578,989 1,911,987 401,960 2,313,946

1,239,883 289,251 653,416 2,182,551 457,423 2,639,974

1,421,158 319,166 732,661 2,472,985 516,840 2,989,826

1,615,155 350,103 816,070 2,781,329 579,786 3,361,115

1,820,498 381,624 902,793 3,104,916 645,692 3,750,607

2,035,385 413,207 991,778 3,440,371 713,839 4,154,210

2,257,598 444,250 1,081,781 3,783,629 783,371 4,567,000

2,484,528 474,082 1,171,379 4,129,989 853,296 4,983,285

2,713,224 501,971 1,258,999 4,474,194 922,512 5,396,706

Investment income of savings bank subsidiary Interest expense on savings bank deposits Net revenues

5,900 4,800 2,228,300

6,400 5,000 2,116,300

5,749 4,698 1,862,935

7,144 5,838 2,315,253

8,151 6,661 2,641,464

9,231 7,543 2,991,514

10,378 8,480 3,363,013

11,580 9,463 3,752,724

12,826 10,481 4,156,555

14,101 11,523 4,569,578

15,386 12,573 4,986,098

16,663 13,616 5,399,752

Operating Expenses Compensation & related costs Advertising & promotion expenses Depreciation & amortization of property & equipment Occupancy & facility costs Other operating expenses Total operating expenses

797,200 107,900 53,400 92,100 181,300 1,231,900

815,600 104,100 61,700 101,800 184,600 1,267,800

761,867 91,369 67,647 104,854 162,714 1,188,450

838,126 113,554 73,667 114,186 196,696 1,336,230

956,215 129,553 79,681 123,507 223,837 1,512,793

1,082,934 146,722 85,597 132,678 252,912 1,700,842

1,217,417 164,942 91,321 141,551 283,714 1,898,946

1,358,494 184,056 96,755 149,973 315,964 2,105,243

1,504,681 203,862 101,799 157,791 349,312 2,317,445

1,654,197 224,120 106,354 164,852 383,337 2,532,859

1,804,978 244,548 110,329 171,013 417,554 2,748,422

1,954,721 264,836 113,639 176,144 451,424 2,960,765

996,400

848,500

674,484

979,023

1,128,671

1,290,671

1,464,067

1,647,482

1,839,110

2,036,719

2,237,676

2,438,988

80,400 80,400

(52,300) (52,300)

35,282 35,282

43,848 43,848

50,026 50,026

56,656 56,656

63,691 63,691

71,072 71,072

78,720 78,720

86,542 86,542

94,430 94,430

102,265 102,265

1,076,800 406,200 670,600

796,200 305,400 490,800

709,766 271,840 437,926

1,022,871 391,760 631,112

1,178,697 451,441 727,256

1,347,327 516,026 831,301

1,527,758 585,131 942,627

1,718,554 658,206 1,060,348

1,917,830 734,529 1,183,301

2,123,261 813,209 1,310,052

2,332,106 893,197 1,438,909

2,541,252 973,300 1,567,953

2.53 264,605 0.75

1.89 256,856 0.96

1.69 258,721 1.00

2.42 260,586 1.18

2.77 262,450 1.38

3.15 264,315 1.62

3.54 266,180 1.91

3.96 268,045 2.14

4.38 269,910 2.39

4.82 271,775 2.68

5.26 273,639 3.00

5.69 275,504 3.36

Net operating income Other investment income (loss) Net non-operating income (loss) Income before income taxes & minority interests Provision for income taxes Minority interest in consolidated subsidiaries Net income Earnings per share Net earnings per share-basic Year end shares outstanding ( '000's) Dividends per share


T Rowe Price Group Inc Balance Sheet Fiscal Years Ending 12/31 2007

2008

2009E

2010E

2011E

2012E

2013E

2014E

2015E

2016E

2017E

2018E

ASSETS Cash & cash equivalents Accounts receivable & accrued revenue Investments in sponsored mutual funds Debt securities held by savings bank subsidiary Other investments Property & equipment, net Goodwill Other assets Minority Interest Asset (UTI Asset Mangement) Total assets

785,100 265,300 773,000 126,900 102,300 358,300 668,800 97,600 3,177,300

619,100 177,300 513,500 166,000 41,900 440,100 665,700 195,800 2,819,400

552,446 216,542 664,945 153,113 64,821 482,516 665,700 108,947 138,000 2,909,030

690,669 269,119 714,295 190,288 80,559 525,461 665,700 122,021 138,000 3,258,111

1,009,367 307,036 767,307 217,099 91,909 568,353 665,700 141,112 138,000 3,767,885

1,373,109 347,725 824,253 245,869 104,089 610,555 665,700 162,299 138,000 4,333,600

1,779,273 390,907 885,426 276,402 117,016 651,387 665,700 185,442 138,000 4,951,553

2,249,466 436,206 951,138 308,432 130,576 690,145 665,700 211,338 138,000 5,643,002

2,782,280 483,146 1,021,728 341,623 144,627 726,120 665,700 239,880 138,000 6,405,104

3,375,883 531,155 1,097,556 375,569 158,998 758,614 665,700 270,939 138,000 7,234,414

4,026,358 579,570 1,179,012 409,802 173,491 786,968 665,700 304,300 138,000 8,125,200

4,727,393 627,652 1,266,513 443,800 187,884 810,577 665,700 339,653 138,000 9,069,171

LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accounts payable & accrued expenses Accrued compensation & related costs Income taxes payable Dividends payable Customer deposits at savings bank subsidiary Total liabilities

99,500 81,100 41,700 63,600 114,300 400,200

86,800 60,700 25,300 157,800 330,600

80,315 73,690 22,093 77,844 135,833 389,775

99,815 81,066 31,839 92,162 168,813 473,694

113,879 92,488 36,689 109,106 192,598 544,760

128,970 104,744 41,938 129,160 218,122 622,934

144,986 117,752 47,554 152,892 245,209 708,393

161,787 131,397 53,493 172,439 273,624 792,741

179,197 145,537 59,696 194,475 303,069 881,974

197,004 159,999 66,090 219,317 333,184 975,593

214,961 174,583 72,591 247,321 363,554 1,073,008

232,794 189,066 79,101 278,887 393,715 1,173,562

Stockholders' Equity Common Equity Retained earnings Accumlated other comprehensive income (loss) Total stockholders' equity Total liabilities and stockholders' equity

348,700 2,333,400 95,000 2,777,100 3,177,300

415,100 2,086,800 (13,100) 2,488,800 2,819,400

419,165 2,188,160 (88,071) 2,519,255 2,909,030

423,430 2,498,650 (137,663) 2,784,417 3,258,111

428,610 2,846,339 (51,824) 3,223,125 3,767,885

435,652 3,228,315 46,700 3,710,666 4,333,600

445,820 3,639,063 158,277 4,243,160 4,951,553

460,763 4,106,752 282,747 4,850,262 5,643,002

482,592 4,621,667 418,872 5,523,130 6,405,104

513,968 5,177,963 566,890 6,258,821 7,234,414

558,212 5,766,884 727,097 7,052,192 8,125,200

619,417 6,376,372 899,820 7,895,609 9,069,171


T Rowe Price Group Inc Cash Flow Statement Fiscal Years Ending 12/31 2007

2008

2009E

2010E

2011E

2012E

2013E

2014E

2015E

2016E

2017E

2018E

670,600 53,400 79,800 600 (42,700) 23,900 (27,600) 758,000

490,800 61,700 85,500 600 89,400 (45,600) (31,900) 741,800

437,926 67,647 79,673 600 (39,242) (6,485) 82,383 622,501

631,112 73,667 87,829 600 (52,576) 19,500 (127,768) 632,364

727,256 79,681 99,100 550 (37,918) 14,064 (28,794) 853,938

831,301 85,597 109,740 500 (40,689) 15,091 (28,782) 972,758

942,627 91,321 119,748 500 (43,182) 16,016 (28,324) 1,098,707

1,060,348 96,755 129,123 500 (45,299) 16,801 (29,041) 1,229,187

1,183,301 101,799 137,861 500 (46,940) 17,410 (31,271) 1,362,659

1,310,052 106,354 145,961 500 (48,009) 17,806 (33,677) 1,498,988

1,438,909 110,329 153,419 (48,415) 17,957 (36,268) 1,635,932

1,567,953 113,639 160,234 (48,082) 17,833 (39,055) 1,772,521

Cash flows from investing activities Acquisition of minority interest in UTI Asset Management Net investments in sponsored mutual funds Net investments in debt securities by savings bank subsidiary Net other investments made Additions to property & equipment Net cash flows from investing activities

(175,500) (1,200) (22,400) (145,600) (344,700)

(2,600) (41,300) 63,000 (144,100) (125,000)

(138,000) (151,445) 12,887 (22,921) (110,663) (410,141)

(52,576) (37,176) (15,738) (117,213) (222,703)

(37,918) (26,811) (11,350) (123,123) (199,202)

(40,689) (28,770) (12,180) (128,298) (209,937)

(43,182) (30,533) (12,926) (132,653) (219,295)

(45,299) (32,030) (13,560) (136,014) (226,903)

(46,940) (33,190) (14,051) (138,273) (232,455)

(48,009) (33,946) (14,371) (139,349) (235,674)

(48,415) (34,233) (14,493) (138,683) (235,824)

(48,082) (33,998) (14,393) (137,248) (233,721)

Cash flows from financing activities Repurchases of common shares Common share issuances under stock-based compensation plans Dividends paid to stockholders Change in savings bank subsidiary deposits Net cash flows from financing activities

(312,100) 91,600 (180,300) (400) (401,200)

(614,200) 100,400 (312,500) 43,500 (782,800)

(307,944) 309,618 (258,721) (21,967) (279,014)

(345,100) 346,986 (306,305) 32,980 (271,438)

(388,380) 391,180 (362,622) 23,785 (336,037)

(434,256) 438,926 (429,272) 25,523 (399,079)

(482,942) 490,754 (508,147) 27,087 (473,248)

(534,655) 547,261 (573,111) 28,415 (532,090)

(589,604) 609,119 (646,350) 29,445 (597,391)

(647,999) 677,087 (728,914) 30,115 (669,711)

(710,038) 752,020 (821,985) 30,370 (749,633)

(775,909) 834,880 (926,898) 30,161 (837,766)

12,100 773,000 785,100

(166,000) 785,100 619,100

(66,654) 619,100 552,446

138,223 552,446 690,669

318,699 690,669 1,009,367

363,742 1,009,367 1,373,109

406,164 1,373,109 1,779,273

470,194 1,779,273 2,249,466

532,814 2,249,466 2,782,280

593,603 2,782,280 3,375,883

650,475 3,375,883 4,026,358

701,035 4,026,358 4,727,393

Cash flows from operating activities Net income Depreciation & amortization of property & equipment Stock-based compensation expense Intangible asset amortization Accounts receivable & accrued revenue Accounts payable & accrued liabilities Other assets & liabilities Net cash flows from operating activities

Net increase (decrease) in cash & cash equivalents during year Cash & cash equivalents at beginning of year Cash & cash equivalents at end of year


T Rowe Price Group Inc Revenue Decomposition Fiscal Years Ending 12/31 2007

2008 averages

AUM at beginning of year

334.7

Sponsored mutual funds in the U.S. Other portfolios Net cash inflows Net cash inflows as % of AUM Stock Gains Bond Gains Other Portfolio Gains Net market gains (losses) and income Mutual fund distributions not reinvested Increase (decrease) during year

20.2 13.6 33.8 10.1%

3.9 13.2 17.1 4.3%

32.4 (0.9) 65.400986

(140.3) (0.5) (123.7)

AUM at end of year Stock AUM ($B) % of total AUM Bond AUM ($B) % of total AUM Other Port AUM ($B) % of total AUM Investment advisory fees income Stock and blended asset Bond and money market Other portfolios Total investment advisory fees Administrative fees & other income

400.0

400.0

276.3

200.6 50.2% 45.4 11.4% 154.0 38.5%

117.9 42.7% 46.5 16.8% 111.9 40.5%

1,168,700 0.63% 184,600 0.44% 525,800 0.37% 1,879,100 348,100 0.09%

1,031,400 0.65% 207,400 0.45% 522,200 0.39% 1,761,000 353,900 0.10%

2009E

2010E 276.3

7.4%

48.2% 13.9% 37.8%

2011E

2012E

2013E

2014E

2015E

2016E

2017E

2018E

366.2

418.3

474.4

534.3

597.3

662.9

730.3

798.6

866.8

74.5

27.18 7.4% 13.11 2.53 9.28 24.93

27.69 6.6% 15.16 2.81 10.48 28.45

27.59 5.8% 17.38 3.10 11.75 32.23

26.79 5.0% 19.75 3.40 13.09 36.24

25.15 4.2% 22.27 3.71 14.48 40.45

22.59 3.4% 24.89 4.01 15.90 44.81

19.03 2.6% 27.61 4.32 17.35 49.27

14.40 1.8% 30.39 4.61 18.78 53.78

8.67 1.0% 33.18 4.88 20.19 58.25

89.9

52.1

56.1

59.8

63.0

65.6

67.4

68.3

68.2

66.9

15.4 5.6%

366.2

418.3

474.4

534.3

597.3

662.9

730.3

798.6

866.8

933.7

162.0 44.24% 56.2 15.35% 147.8 40.36%

188.2 45.00% 62.5 14.95% 167.4 40.01%

216.7 45.68% 69.2 14.58% 188.3 39.69%

247.4 46.31% 76.1 14.25% 210.5 39.40%

280.1 46.89% 83.3 13.94% 233.7 39.13%

314.5 47.44% 90.5 13.65% 257.7 38.88%

350.3 47.96% 97.7 13.37% 282.2 38.64%

387.1 48.47% 104.6 13.10% 306.7 38.40%

424.4 48.96% 111.3 12.84% 330.9 38.18%

461.8 49.46% 117.3 12.57% 354.4 37.96%

835,901.0

1,072,287.5

1,239,883.0

1,421,158.4

1,615,155.3

1,820,498.0

2,035,385.0

2,257,598.0

2,484,528.3

2,713,223.9

223,705.8

260,710.8

289,251.0

319,166.1

350,103.3

381,624.4

413,207.3

444,250.4

474,081.6

501,970.9

469,762.0

578,988.7

653,416.5

732,660.9

816,070.3

902,793.3

991,778.4

1,081,780.9

1,171,379.0

1,258,999.1

1,529,368.8 332,515.0

1,911,987.0 401,959.5

2,182,550.5 457,423.2

2,472,985.5 516,840.3

2,781,328.9 579,786.3

3,104,915.7 645,691.5

3,440,370.7 713,839.2

3,783,629.3 783,370.7

4,129,989.0 853,296.0

4,474,193.9 922,512.0

0.61% 0.44% 0.37%

0.10%


T Rowe Price Group Inc Common Size Income Statement Fiscal Years Ending 12/31 2007 Revenues Investment advisory fees income Stock and blended asse Bond and money marke Other portfolios Total investment advisory fee Administrative fees & other income Total revenues

2008

2009E

2010E

2011E

2012E

2013E

2014E

2015E

2016E

2017E

2018E

52.34% 48.62% 44.90% 46.34% 46.97% 47.53% 48.05% 48.54% 49.00% 49.43% 49.86% 50.28% 9.95% 9.73% 9.51% 9.30% 8.27% 9.78% 12.02% 11.27% 10.96% 10.68% 10.42% 10.18% 23.55% 24.62% 25.23% 25.02% 24.75% 24.51% 24.28% 24.07% 23.87% 23.69% 23.51% 23.33% 84.15% 83.02% 82.14% 82.63% 82.67% 82.71% 82.75% 82.78% 82.82% 82.85% 82.88% 82.91% 15.59% 16.68% 17.86% 17.37% 17.33% 17.29% 17.25% 17.22% 17.18% 17.15% 17.12% 17.09% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Investment income of savings bank subsidiary Interest expense on savings bank deposits Net revenues

0.26% 0.21% 99.79%

0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.30% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.24% 99.76% 100.06% 100.06% 100.06% 100.06% 100.06% 100.06% 100.06% 100.06% 100.06% 100.06%

Operating Expenses Compensation & related costs Advertising & promotion expenses Depreciation & amortization of property & equipment Occupancy & facility costs Other operating expenses Total operating expenses

35.70% 4.83% 2.39% 4.12% 8.12% 55.17%

38.45% 4.91% 2.91% 4.80% 8.70% 59.77%

40.92% 4.91% 3.63% 5.63% 8.74% 63.83%

36.22% 4.91% 3.18% 4.93% 8.50% 57.75%

36.22% 4.91% 3.02% 4.68% 8.48% 57.30%

36.22% 4.91% 2.86% 4.44% 8.46% 56.89%

36.22% 4.91% 2.72% 4.21% 8.44% 56.50%

36.22% 4.91% 2.58% 4.00% 8.42% 56.13%

36.22% 4.91% 2.45% 3.80% 8.41% 55.79%

36.22% 4.91% 2.33% 3.61% 8.39% 55.46%

36.22% 4.91% 2.21% 3.43% 8.38% 55.15%

36.22% 4.91% 2.11% 3.26% 8.36% 54.86%

Net operating income

44.62%

40.00%

36.23%

42.31%

42.75%

43.17%

43.56%

43.93%

44.27%

44.60%

44.90%

45.19%

3.60% 3.60%

-2.47% -2.47%

1.89% 1.89%

1.89% 1.89%

1.89% 1.89%

1.89% 1.89%

1.89% 1.89%

1.89% 1.89%

1.89% 1.89%

1.89% 1.89%

1.89% 1.89%

1.89% 1.89%

48.22% 18.19% 30.03%

37.53% 14.40% 23.14%

38.12% 14.60% 23.52%

44.20% 16.93% 27.27%

44.65% 17.10% 27.55%

45.06% 17.26% 27.80%

45.45% 17.41% 28.05%

45.82% 17.55% 28.27%

46.17% 17.68% 28.48%

46.49% 17.81% 28.69%

46.80% 17.92% 28.87%

47.09% 18.04% 29.05%

Other investment income (loss) Credit facility expenses Net non-operating income (loss) Income before income taxes & minority interests Provision for income taxes Net income


T Rowe Price Group Inc Common Size Balance Sheet Fiscal Years Ending 12/31 2007 ASSETS Cash & cash equivalents Accounts receivable & accrued revenue Investments in sponsored mutual funds Debt securities held by savings bank subsidiary Other investments Property & equipment, net Goodwill Other assets Minority Interest Asset (UTI Asset Mangement) Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accounts payable & accrued expenses Accrued compensation & related costs Income taxes payable Dividends payable Customer deposits at savings bank subsidiary Total liabilities Stockholders' Equity Common Equity Retained earnings Accumlated other comprehensive income (loss) Total stockholders' equity Total liabilities and stockholders' equity

2008

2009E

2010E

2011E

2012E

2013E

2014E

2015E

2016E

2017E

2018E

29.67% 29.85% 38.23% 45.93% 52.94% 59.98% 66.97% 73.92% 80.80% 87.60% 35.16% 29.18% 11.63% 11.63% 11.63% 11.63% 11.63% 11.63% 11.63% 11.63% 11.63% 11.63% 11.88% 8.36% 35.71% 30.87% 29.06% 27.57% 26.34% 25.36% 24.59% 24.03% 23.66% 23.47% 34.62% 24.21% 8.22% 8.22% 8.22% 8.22% 8.22% 8.22% 8.22% 8.22% 8.22% 8.22% 5.68% 7.83% 4.58% 1.98% 3.48% 3.48% 3.48% 3.48% 3.48% 3.48% 3.48% 3.48% 3.48% 3.48% 16.04% 20.75% 25.92% 22.71% 21.53% 20.42% 19.38% 18.40% 17.48% 16.61% 15.79% 15.02% 29.95% 31.38% 35.75% 28.77% 25.22% 22.27% 19.81% 17.75% 16.02% 14.58% 13.36% 12.34% 4.37% 9.23% 5.85% 5.27% 5.35% 5.43% 5.52% 5.63% 5.77% 5.93% 6.11% 6.29% 0.00% 0.00% 7.41% 5.96% 5.23% 4.62% 4.11% 3.68% 3.32% 3.02% 2.77% 2.56% 142.28% 132.91% 156.24% 140.80% 142.72% 144.94% 147.32% 150.46% 154.18% 158.41% 163.05% 168.05%

4.46% 3.63% 1.87% 2.85% 5.12% 17.92%

4.09% 2.86% 1.19% 0.00% 7.44% 15.58%

4.31% 3.96% 1.19% 4.18% 7.30% 20.93%

4.31% 3.50% 1.38% 3.98% 7.30% 20.47%

4.31% 3.50% 1.39% 4.13% 7.30% 20.64%

4.31% 3.50% 1.40% 4.32% 7.30% 20.84%

4.31% 3.50% 1.41% 4.55% 7.30% 21.08%

4.31% 3.50% 1.43% 4.60% 7.30% 21.14%

4.31% 3.50% 1.44% 4.68% 7.30% 21.23%

4.31% 3.50% 1.45% 4.80% 7.30% 21.36%

4.31% 3.50% 1.46% 4.96% 7.30% 21.53%

4.31% 3.50% 1.47% 5.17% 7.30% 21.75%

15.62% 19.57% 22.51% 18.30% 16.24% 14.57% 13.26% 12.29% 11.62% 11.25% 11.20% 11.48% 104.49% 98.37% 117.52% 107.98% 107.82% 107.98% 108.27% 109.50% 111.25% 113.38% 115.72% 118.15% 4.25% -0.62% -4.73% -5.95% -1.96% 1.56% 4.71% 7.54% 10.08% 12.41% 14.59% 16.67% 124.36% 117.32% 135.31% 120.33% 122.09% 124.11% 126.24% 129.32% 132.95% 137.04% 141.52% 146.30% 142.28% 132.91% 156.24% 140.80% 142.72% 144.94% 147.32% 150.46% 154.18% 158.41% 163.05% 168.05%


T Rowe Price Group Inc Value Driver Estimation Fiscal Years Ending 12/31 2008

2009E

2010E

2011E

2012E

2013E

2014E

2015E

2016E

2017E

2018CV

NOPLAT Income before taxes Plus: Interest expense (savings bank Less: Interest Income (savings bank Plus: Goodwill amortization Less: Non-operating income EBITA

796,200 5,000 6,400 (52,300) 847,100

709,766 4,698 5,749 35,282 673,433

1,022,871 5,838 7,144 43,848 977,717

1,178,697 6,661 8,151 50,026 1,127,181

1,347,327 7,543 9,231 56,656 1,288,983

1,527,758 8,480 10,378 63,691 1,462,169

1,718,554 9,463 11,580 71,072 1,645,364

1,917,830 10,481 12,826 78,720 1,836,765

2,123,261 11,523 14,101 86,542 2,034,141

2,332,106 12,573 15,386 94,430 2,234,863

2,541,252 13,616 16,663 102,265 2,435,941

Provision for income taxes Marginal tax rate Plus: Tax shield on interest expense (savings bank Less: Taxes on interest income (savings bank Plus: Tax shield on amortization Less: Taxes on non-operating income Less: Adjusted Taxes

305,400 38.3% 1,915 2,451 (20,031) 324,895

271,840 38.3% 1,799 2,202 13,513 257,925

391,760 38.3% 2,236 2,736 16,794 374,466

451,441 38.3% 2,551 3,122 19,160 431,710

516,026 38.3% 2,889 3,536 21,699 493,681

585,131 38.3% 3,248 3,975 24,394 560,011

658,206 38.3% 3,624 4,435 27,221 630,175

734,529 38.3% 4,014 4,912 30,150 703,481

813,209 38.3% 4,413 5,401 33,146 779,076

893,197 38.3% 4,815 5,893 36,167 855,952

973,300 38.3% 5,215 6,382 39,167 932,965

Plus: Change in deferred tax liability NOPLAT

-

-

-

-

-

-

-

-

-

-

-

522,205

415,508

603,251

695,471

795,303

902,158

1,015,190

1,133,284

1,255,065

1,378,910

1,502,976

605,586 177,300 513,500 1,296,386

531,528 216,542 664,945 1,413,016

660,582 269,119 714,295 1,643,996

753,656 307,036 767,307 1,828,000

853,532 347,725 824,253 2,025,510

959,527 390,907 885,426 2,235,860

1,070,719 436,206 951,138 2,458,063

1,185,939 483,146 1,021,728 2,690,813

1,303,781 531,155 1,097,556 2,932,492

1,422,622 579,570 1,179,012 3,181,204

1,540,645 627,652 1,266,513 3,434,810

86,800 60,700 25,300 172,800

80,315 73,690 22,093 77,844 253,942

99,815 81,066 31,839 92,162 304,881

113,879 92,488 36,689 109,106 352,162

128,970 104,744 41,938 129,160 404,812

144,986 117,752 47,554 152,892 463,184

161,787 131,397 53,493 172,439 519,116

179,197 145,537 59,696 194,475 578,905

197,004 159,999 66,090 219,317 642,409

214,961 174,583 72,591 247,321 709,454

232,794 189,066 79,101 278,887 779,848

Net Operating Working Capital Net: PPE Other Operating Assets PV Operating Leases Less: Other Contractual Purchase Commitments Invested Capita

1,123,586 440,100 195,800 182,264 205,000 1,736,750

1,159,074 482,516 108,947 163,398 190,000 1,723,935

1,339,115 525,461 122,021 177,940 206,911 1,957,627

1,475,838 568,353 141,112 192,465 223,800 2,153,969

1,620,698 610,555 162,299 206,756 240,418 2,359,890

1,772,676 651,387 185,442 220,583 256,496 2,573,592

1,938,947 690,145 211,338 233,708 271,758 2,802,381

2,111,908 726,120 239,880 245,891 285,924 3,037,874

2,290,083 758,614 270,939 256,895 298,719 3,277,812

2,471,750 786,968 304,300 266,496 309,884 3,519,630

2,654,963 810,577 339,653 274,491 319,180 3,760,503

NOPLAT Beginning Invested Capital Return On Invested Capita

522,205 1,817,265 28.74%

415,508 1,736,750 23.92%

603,251 1,723,935 34.99%

695,471 1,957,627 35.53%

795,303 2,153,969 36.92%

902,158 2,359,890 38.23%

1,015,190 2,573,592 39.45%

1,133,284 2,802,381 40.44%

1,255,065 3,037,874 41.31%

1,378,910 3,277,812 42.07%

1,502,976 3,519,630 42.70%

522,205 (80,515) 602,720

415,508 (12,815) 428,323

603,251 233,692 369,560

695,471 196,342 499,129

795,303 205,921 589,381

902,158 213,702 688,457

1,015,190 228,788 786,401

1,133,284 235,494 897,790

1,255,065 239,937 1,015,128

1,378,910 241,818 1,137,092

1,502,976 240,873 1,262,102

1,817,265 28.74% 12.58% 293,556

1,736,750 23.92% 12.58% 196,989

1,723,935 34.99% 12.32% 390,802

1,957,627 35.53% 12.06% 459,285

2,153,969 36.92% 11.81% 540,998

2,359,890 38.23% 11.55% 629,644

2,573,592 39.45% 11.29% 724,652

2,802,381 40.44% 11.03% 824,164

3,037,874 41.31% 10.77% 927,824

3,277,812 42.07% 10.51% 1,034,298

3,519,630 42.70% 10.51% 1,132,940

SAVINGS BANK SUBSIDIARY Cash from Operations Interest Income less: Interest Expense less: Tax on Income Marginal tax rate plus: Tax Shield on Expense Total Cash from Operations

6,400 5,000 2,451 38.30% 1,915 864

5,749 4,698 2,202 38.30% 1,799 648

7,144 5,838 2,736 38.30% 2,236 806

8,151 6,661 3,122 38.30% 2,551 919

9,231 7,543 3,536 38.30% 2,889 1,041

10,378 8,480 3,975 38.30% 3,248 1,171

11,580 9,463 4,435 38.30% 3,624 1,306

12,826 10,481 4,912 38.30% 4,014 1,447

14,101 11,523 5,401 38.30% 4,413 1,591

15,386 12,573 5,893 38.30% 4,815 1,736

16,663 13,616 6,382 38.30% 5,215 1,880

plus: Change in Cash plus: Change in Deposits less: Uses of Deposits FCFE

(4,400) 43,500 39,100 864

9,080 (21,967) (12,887) 648

4,195 32,980 37,176 806

3,026 23,785 26,811 919

3,247 25,523 28,770 1,041

3,446 27,087 30,533 1,171

3,615 28,415 32,030 1,306

3,746 29,445 33,190 1,447

3,831 30,115 33,946 1,591

3,863 30,370 34,233 1,736

3,837 30,161 33,998 1,880

INVESTED CAPITAL Normal Cash Accounts receivable & accrued revenue Investments in sponsored mutual funds Operating Current Assets Accounts payable & accrued expenses Accrued compensation & related costs Income taxes payable Dividends payable Operating Current Liabilities

NOPLAT Less: Change In Invested Capital Free Cash Flow

Beginning Invested Capital ROIC WACC Economic Profit


T Rowe Price Group Inc Discounted Cash Flow (DCF) and Economic Profit (EP) Model Valuation Fiscal Years Ending 12/31 Assumptions:

CV growth CV ROIC WACC (CV) Cost of Equity (CV)

6.00% 42.70% 10.51% 10.61% 2009E

DCF Model FCF PV(FCF) PV(FCF) plus: Excess Cash plus: Other Investments less: PV(ESOP) less: PV(Op.Leases) PV(Equity) Shares Outstanding Target Price Adj. Target Price EP Model ROIC EP PV(EP) PV(EP) Invested Capital PV(Operations) plus: Excess Cash plus: Other Investments less: PV(ESOP) less:PV(Op.Leases) PV(Equity) Shares Outstanding Target Price Adj. Target Price

FCFE FCFE PV(FCFE) PV(FCFE) Shares Outstanding Target Price (deduction) Adj. Target Price (deduction)

428,323 380,454 $ $ $ $ $ $

14,147,737 20,917 41,900 (912,967) (163,398) 13,134,189,291 258,720,825 50.77 56.27

$ $

12,410,987 1,736,750 14,147,737 20,917 41,900 (912,967) (163,398) 13,134,189,290.52 258,720,825 50.77 56.27

369,560 292,243

2011E

2012E

2013E

2014E

2015E

499,129 352,211

589,381 371,981

688,457 389,529

786,401 399,811

897,790 411,095

35.53% 459,285 324,095

36.92% 540,998 341,444

38.23% 629,644 356,253

39.45% 724,652 368,417

40.44% 824,164 377,382

2016E

1,015,128 419,622

2017E

2018CV

1,137,092 425,322

28,620,926 10,705,469

34.99% 390,802 309,042

41.31% 927,824 383,533

42.07% 1,034,298 386,872

42.70% 25,101,296 9,388,975

plus: FCFE $ 50.76 $ 56.26

648 575

$ $

2010E

1,880 6.00% 4.0643%

plus: FCFE $ 50.76 $ 56.26

23.92% 196,989 174,974 $ $ $ $ $ $ $ $

FCFE CV NI CV NI Growth CV ROE

806 636

919 647

1,041 654

1,171 659

1,306 660

1,447 658

1,591 652

1,736 644

(19,420) (7,200)

(1,414,655) 258,720,825 (0.01) (0.01)

Calculations for FCFE CV NI Total Cash From Operations (2018E) CV NI Growth CV ROE Total Cash From Operations (2018E) / Total Equity (2018E)

1,880 6.00%

4.06% WACC Cost of Equity Discounting (WACC) Discounting (Equity)

12.58% 12.70%

12.32% 12.44%

12.06% 12.18%

11.81% 11.92%

11.55% 11.66%

11.29% 11.40%

11.03% 11.13%

10.77% 10.87%

10.51% 10.61%

10.51% 10.61%

1.125821 1.12704

1.264561 1.2672682

1.417129284 1.421627325

1.58444 1.591067

1.767408 1.776537

1.966934 1.978978

2.183899 2.199307

2.41914977 2.43841039

2.67348643 2.69712573

2.673486432 2.697125731


T Rowe Price Group Inc Weighted Average Cost of Capital (WACC) Estimation Common Shares Outstanding Current Price Market Value of Equity

$ $

Preferred Shares Outstanding Current Price Market Value of Preferred

258,720,825 51.51 13,326,709,714.90

98.8%

0 0 0

0%

Market Value of Debt

$

163,397,638.69

Value of Capital

$

13,490,107,353.59

Risk Free Rate Market Premium Beta Cost of Equity Cost of Preferred Cost of Debt After Tax WACC

1.211%

2009

2010

2011

2012

2013

2014

2015

2016

2017 2018CV

4.36% 5.00% 1.67

1.62

1.56

1.51

1.46

1.41

1.35

1.30

1.25

1.25

12.70% 12.44% 12.18% 11.92% 11.66% 11.40% 11.13% 10.87% 10.61% 10.61% 0% 4.28% 2.64% 12.58% 12.32% 12.06% 11.81% 11.55% 11.29% 11.03% 10.77% 10.51% 10.51%


T Rowe Price Group Inc Dividend Discount Model (DDM) or Fundamental P/E Valuation Model Fiscal Years Ending 12/31 2009E EPS

$

Key Assumptions WACC ROE CV growth Retention Ratio Cost of Equity Future Cash Flows EPS(next period) Future Stock Price Dividends Per Share Future Cash Flows

$ 2.42

2011E $ 2.77

2012E $ 3.15

2013E $ 3.54

2014E $ 3.96

2015E $ 4.38

2016E $ 4.82

12.58% 12.32% 12.06% 11.81% 11.55% 11.29% 11.03% 10.77% 19.86% 8.12% 40.88% 12.70% 12.44% 12.18% 11.92% 11.66% 11.40% 11.13% 10.87%

2017E $

5.26

2018E $ 5.69

10.51% 10.51%

10.61% 10.61%

$ 5.69

$

Discounted Cash Flows Intrinsic Value Adj. Intrinsic Value

1.69

2010E

1.00 1.00 0.89

$ $

63.67 70.57

1.18 $ 1.18 0.93

1.38 $ 1.38 0.98

1.62 $ 1.62 1.04

1.91 $ 1.91 1.11

2.14 $ 2.14 1.13

2.39 $ 2.39 1.15

2.68 $ 2.68 1.18

$ 135.07 3.00 $ 138.07 56.15

3.36


Relative P/E Analysis Ticker BLK BEN BAM LM BX SEIC STT LAZ

Company BlackRock Inc. Franklin Resources Inc. Brookfield Asset Management Inc. Legg Mason Inc. The Blackstone Group SEI Investments Co. State Street Corp. Lazard Ltd.

TROW

T.Rowe Price

Implied Value: Relative P/E (EPS09) Relative P/E (EPS10) PEG Ratio (EPS09) PEG Ratio (EPS10) Average Implied Value

Price $231.25 $113.92 $21.00 $31.61 $15.23 $18.00 $40.66 $40.37

EPS 2009E $6.76 $3.89 $0.68 $1.29 $0.51 $0.94 $4.11 $1.01

EPS 2010E $10.22 $5.93 $0.69 $1.56 $0.98 $1.16 $4.44 $2.26 Average

$51.51

$1.69

$2.42

$ $ $ $ $

50.26 48.94 50.38 50.52 50.02

P/E 09 34.2 29.3 30.9 24.5 29.9 19.1 9.9 40.0 29.7

P/E 10 22.6 19.2 30.4 20.3 15.5 15.5 9.2 17.9 20.2

30.4

21.3

Est. 5yr Gr. 13.0 9.8 13.0 7.33 14.3 12.3 9.20 15.50

11.87

(average PEG ratio * growth * EPS)

PEG 09 2.63 2.99 2.38 3.34 2.08 1.55 1.08 2.58 2.5 2.6

PEG 10 1.74 1.96 2.34 2.76 1.08 1.26 1.00 1.15 1.8 1.8


Effects of ESOP Exercise and Share Repurchases on Common Stock Balance Sheet Account and Number of Shares Outstanding Number of Options Outstanding (shares): Average Time to Maturity (years): Expected Annual Number of Options Exercised: Current Average Strike Price: Cost of Equity: Current Stock Price:

Increase in Shares Outstanding: Average Strike Price: Stock Based Compensation Expense Shares for SBCE Increase in Common Stock Account: Change in Treasury Stock Expected Price of Repurchased Shares: Number of Shares Repurchased: Shares Outstanding (beginning of the year) Plus: Shares Issued Through ESOP Plus: Shares Issued Through SBCE Less: Shares Repurchased in Treasury Shares Outstanding (end of the year) Average Change in shares

39,037,741 6.20 6,296,410 $ $

36.52 12.70% 51.51

12.44%

12.18%

11.92%

11.66%

11.40%

11.13%

10.87%

10.61%

10.61%

$ $

2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 36.52 $ 41.16 $ 46.39 $ 52.28 $ 58.92 $ 66.41 $ 74.85 $ 84.35 $ 95.07 $ 107.15 79,672,963 $ 87,829,417 $ 99,099,554 $ 109,739,700 $ 119,748,135 $ 129,122,775 $ 137,861,261 $ 145,961,041 $ 153,419,444 $ 160,233,746 1,546,747 1,512,897 1,518,139 1,498,603 1,461,129 1,411,032 1,352,414 1,288,426 1,221,468 1,153,350 309,617,851 346,986,397 391,179,717 438,925,593 490,753,653 547,260,663 609,119,194 677,087,365 752,019,812 834,880,030

$

307,943,879 345,099,765 388,380,018 434,255,871 482,942,485 534,654,607 589,604,388 647,998,937 710,037,617 775,909,107 51.51 $ 58.05 $ 65.28 $ 73.23 $ 81.96 $ 91.51 $ 101.94 $ 113.29 $ 125.60 $ 138.93 5,978,332 5,944,481 5,949,724 5,930,187 5,892,714 5,842,617 5,783,999 5,720,010 5,653,052 5,584,935 256,856,000 6,296,410 1,546,747 5,978,332 258,720,825

258,720,825 6,296,410 1,512,897 5,944,481 260,585,651

260,585,651 6,296,410 1,518,139 5,949,724 262,450,476

262,450,476 6,296,410 1,498,603 5,930,187 264,315,301

264,315,301 6,296,410 1,461,129 5,892,714 266,180,127

266,180,127 6,296,410 1,411,032 5,842,617 268,044,952

268,044,952 6,296,410 1,352,414 5,783,999 269,909,778

269,909,778 6,296,410 1,288,426 5,720,010 271,774,603

271,774,603 6,296,410 1,221,468 5,653,052 273,639,428

273,639,428 6,296,410 1,153,350 5,584,935 275,504,254

1,864,825

1,864,825

1,864,825

1,864,825

1,864,825

1,864,825

1,864,825

1,864,825

1,864,825

1,864,825


VALUATION OF OPTIONS GRANTED IN ESOP

Ticker Symbol Current Stock Price Risk Free Rate Current Dividend Yield Annualized St. Dev. of Stock Returns

Range of Outstanding Options Range 1 Total

Average Number Exercise of Shares Price 39,037,741 36.52 39,037,741 $ 36.52

TROW 51.51 4.36% 1.94% 36.18%

Average Remaining Life (yrs) 6.20 $ 6.20 $

B-S Value Option of Options Price Granted 23.39 $ 912,967,146 28.30 $ 912,967,146


Operating and Capital Lease Obligations Capital Leases

Years Ended April 30, 2009 2010 2011 2012 2013 Thereafter Total Minimum Payments Less: Interest PV of Minimum Payments

Operating Leases 26,000 24,000 24,000 21,000 21,000 81,000 197000 33602 163398

Capitalization of Operating Leases Pre-Tax Cost of Debt Number Years Implied by Year 6 Payment

Year 1 2 3 4 5 6 & beyond PV of Minimum Payments

Lease Commitment 26000 24000 24000 21000 21000 27000

4.28% 3 PV Lease Payment 24932.9 22070.3 21164.5 17758.9 17030.0 60441.1 163397.6


56.26 5.00% 5.25% 5.50% 5.75% 6.00% 6.25% 6.50% 6.75%

1.42 $ 42.43 $ 43.51 $ 44.70 $ 45.98 $ 47.39 $ 48.93 $ 50.63 $ 52.52

1.38 $ 44.07 $ 45.27 $ 46.57 $ 48.00 $ 49.56 $ 51.29 $ 53.20 $ 55.33

1.33 $ 45.85 $ 47.17 $ 48.62 $ 50.21 $ 51.96 $ 53.89 $ 56.05 $ 58.47

1.28 $ 47.78 $ 49.25 $ 50.86 $ 52.63 $ 54.59 $ 56.78 $ 59.23 $ 61.99

CV Beta 1.25 $ 48.99 $ 50.55 $ 52.26 $ 54.16 $ 56.26 $ 58.62 $ 61.26 $ 64.26

1.23 $ 49.88 $ 51.52 $ 53.31 $ 55.30 $ 57.52 $ 60.00 $ 62.80 $ 65.98

1.18 $ 52.18 $ 54.01 $ 56.02 $ 58.27 $ 60.78 $ 63.62 $ 66.84 $ 70.53

1.13 $ 54.71 $ 56.75 $ 59.03 $ 61.57 $ 64.45 $ 67.71 $ 71.45 $ 75.77

$ $ $ $ $ $ $ $

1.08 57.49 59.79 62.38 65.28 68.59 72.37 76.75 81.87

$ $ $ $ $ $ $ $ $ $ $ $ $

1.50 54.08 52.22 50.47 48.82 47.26 45.79 44.39 43.06 41.80 40.60 39.46 38.36 37.32

1.45 $ 56.56 $ 54.60 $ 52.75 $ 51.01 $ 49.37 $ 47.81 $ 46.34 $ 44.94 $ 43.61 $ 42.35 $ 41.15 $ 40.00 $ 38.91

1.40 $ 59.29 $ 57.21 $ 55.25 $ 53.41 $ 51.67 $ 50.03 $ 48.47 $ 46.99 $ 45.59 $ 44.26 $ 42.99 $ 41.79 $ 40.64

1.35 $ 62.30 $ 60.09 $ 58.01 $ 56.05 $ 54.21 $ 52.46 $ 50.81 $ 49.25 $ 47.77 $ 46.36 $ 45.02 $ 43.74 $ 42.53

1.30 $ 65.63 $ 63.27 $ 61.06 $ 58.97 $ 57.01 $ 55.15 $ 53.40 $ 51.74 $ 50.16 $ 48.67 $ 47.25 $ 45.90 $ 44.61

CV Beta 1.25 $ 69.35 $ 66.82 $ 64.45 $ 62.22 $ 60.12 $ 58.13 $ 56.26 $ 54.49 $ 52.82 $ 51.23 $ 49.71 $ 48.28 $ 46.91

1.20 $ 73.53 $ 70.80 $ 68.24 $ 65.85 $ 63.59 $ 61.47 $ 59.46 $ 57.57 $ 55.77 $ 54.07 $ 52.46 $ 50.92 $ 49.46

1.15 $ 78.24 $ 75.29 $ 72.53 $ 69.93 $ 67.50 $ 65.21 $ 63.05 $ 61.01 $ 59.08 $ 57.26 $ 55.52 $ 53.88 $ 52.31

1.10 $ 83.61 $ 80.39 $ 77.39 $ 74.57 $ 71.93 $ 69.45 $ 67.11 $ 64.91 $ 62.82 $ 60.85 $ 58.98 $ 57.21 $ 55.52

$ $ $ $ $ $ $ $ $ $ $ $ $

1.05 89.79 86.26 82.96 79.88 77.00 74.29 71.74 69.34 67.07 64.93 62.91 60.99 59.16

$ $ $ $ $ $ $ $ $ $ $ $ $

1.00 96.96 93.05 89.41 86.01 82.84 79.86 77.06 74.43 71.95 69.61 67.40 65.30 63.32

$ $ $ $ $ $ $ $ $ $ $ $ $

1.50 39.45 40.24 41.05 41.86 42.69 43.53 44.39 45.26 46.14 47.04 47.94 48.87 49.81

1.45 $ 41.15 $ 41.98 $ 42.82 $ 43.68 $ 44.55 $ 45.44 $ 46.34 $ 47.25 $ 48.18 $ 49.12 $ 50.08 $ 51.05 $ 52.04

1.40 $ 43.00 $ 43.87 $ 44.76 $ 45.67 $ 46.59 $ 47.52 $ 48.47 $ 49.43 $ 50.41 $ 51.41 $ 52.42 $ 53.44 $ 54.48

1.35 $ 45.03 $ 45.95 $ 46.90 $ 47.85 $ 48.82 $ 49.81 $ 50.81 $ 51.83 $ 52.86 $ 53.92 $ 54.98 $ 56.07 $ 57.17

1.30 $ 47.27 $ 48.25 $ 49.25 $ 50.26 $ 51.29 $ 52.34 $ 53.40 $ 54.48 $ 55.57 $ 56.68 $ 57.81 $ 58.96 $ 60.13

CV Beta 1.25 $ 49.75 $ 50.80 $ 51.86 $ 52.93 $ 54.03 $ 55.14 $ 56.26 $ 57.41 $ 58.57 $ 59.76 $ 60.96 $ 62.18 $ 63.41

1.20 $ 52.53 $ 53.64 $ 54.77 $ 55.91 $ 57.08 $ 58.26 $ 59.46 $ 60.68 $ 61.92 $ 63.18 $ 64.46 $ 65.76 $ 67.08

1.15 $ 55.64 $ 56.83 $ 58.03 $ 59.26 $ 60.50 $ 61.77 $ 63.05 $ 64.36 $ 65.68 $ 67.03 $ 68.40 $ 69.79 $ 71.20

1.10 $ 59.16 $ 60.43 $ 61.72 $ 63.04 $ 64.38 $ 65.73 $ 67.11 $ 68.51 $ 69.93 $ 71.38 $ 72.85 $ 74.34 $ 75.85

$ $ $ $ $ $ $ $ $ $ $ $ $

1.05 63.17 64.54 65.93 67.35 68.79 70.25 71.74 73.25 74.78 76.34 77.92 79.53 81.16

$ $ $ $ $ $ $ $ $ $ $ $ $

1.00 67.78 69.27 70.78 72.31 73.87 75.45 77.06 78.70 80.36 82.05 83.76 85.50 87.27

56.26 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.36% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00%

4.00% $ 39.85 $ 40.36 $ 40.89 $ 41.42 $ 41.97 $ 42.53 $ 43.10 $ 43.69 $ 44.12 $ 44.29 $ 44.90 $ 45.53 $ 46.18 $ 46.83 $ 47.51

5.00% $ 42.72 $ 43.24 $ 43.77 $ 44.32 $ 44.88 $ 45.45 $ 46.03 $ 46.63 $ 47.07 $ 47.25 $ 47.87 $ 48.52 $ 49.17 $ 49.85 $ 50.54

6.00% $ 45.75 $ 46.29 $ 46.83 $ 47.39 $ 47.96 $ 48.55 $ 49.15 $ 49.76 $ 50.21 $ 50.38 $ 51.02 $ 51.68 $ 52.35 $ 53.04 $ 53.74

7.00% $ 48.98 $ 49.52 $ 50.08 $ 50.65 $ 51.24 $ 51.83 $ 52.45 $ 53.07 $ 53.53 $ 53.71 $ 54.37 $ 55.04 $ 55.72 $ 56.42 $ 57.14

Stock Returns 7.78% 8.00% $ 51.63 $ 52.40 $ 52.19 $ 52.96 $ 52.75 $ 53.53 $ 53.34 $ 54.11 $ 53.93 $ 54.71 $ 54.54 $ 55.32 $ 55.16 $ 55.94 $ 55.80 $ 56.58 $ 56.26 $ 57.05 $ 56.45 $ 57.24 $ 57.11 $ 57.91 $ 57.79 $ 58.59 $ 58.49 $ 59.29 $ 59.20 $ 60.01 $ 59.93 $ 60.74

9.00% $ 56.03 $ 56.60 $ 57.18 $ 57.78 $ 58.39 $ 59.02 $ 59.65 $ 60.31 $ 60.79 $ 60.98 $ 61.66 $ 62.36 $ 63.07 $ 63.81 $ 64.55

10.00% $ 59.87 $ 60.46 $ 61.06 $ 61.67 $ 62.29 $ 62.93 $ 63.59 $ 64.26 $ 64.75 $ 64.94 $ 65.64 $ 66.35 $ 67.08 $ 67.83 $ 68.59

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $

11.00% 63.95 64.55 65.16 65.79 66.43 67.08 67.75 68.44 68.94 69.14 69.85 70.58 71.33 72.09 72.87

$

CV Growth

Market Risk Premium

Asset Inflows

Bond Returns

$ 56.26 4.40% 4.50% 4.60% 4.70% 4.80% 4.90% 5.00% 5.10% 5.20% 5.30% 5.40% 5.50% 5.60%

56.26 -2.00% -1.50% -1.00% -0.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00%

T. Rowe Price  

Analysis of T. Rowe Price

Read more
Read more
Similar to
Popular now
Just for you