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Capital Valuation: Target

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Capital Valuation Paper

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Capital Valuation Paper

A business valuation of a company, especially one the size of Target, is a mystery but is often an integral part of planning, decision-making, strategic assessment, and maybe an equitable resolution to a touchy concern. Knowing what a business is worth and placing a value on it builds confidence so undervalue or overvalue of the business does not happen.

Team C will perform a capital valuation of the retail merchandising chain Target. To obtain the answers needed for the valuation, Team C will justify the current market of Target’s debt and equity by using various capital models of valuation. Team C will provide in-depth …show more content…

The variables in the free cash flow valuation model are value of the whole business, free cash flow anticipated at the end of a specified year, and the business’s average weighted cost of capital (Gitman, 2006).

Rate of Return Calculations

In general, ROI can be calculated once the following is known:

1. The starting investment value (C0)

2. The ending investment value (C1)

The general formula is:

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ROI gives a speedy assessment of investment performance, and it assists that ROI can be computed mentally. Rate of Return is a more complicated return measure and is widely used in the finance world for valuations. Internal Rate of Return is the annualized complex rate, which can be earned on invested money, also known as the yield. Internal Rate of Return consists of investment growth but unlike ROI it also accounts for the timing of the cash flows.

Team C has calculated the Target, selected financial data through the source based on data from Target. Annual Reports. Target’s Return on Investment has worsened from 2008 to 2009 but has gotten better slightly from 2009 to 2010.

|Selected Financial Data |30-Jan-10 |31-Jan-09 |
|Revenues |65,357 |64,948 |
|Stockholders ' Equity Attributable to

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