Refer to the financial information of Target Corporation (T(TT) in P4-39 to answer the following requirements.

\section*{Required}

a. Compute Target's financial leverage (FLEV) and Spread for 2008; recall, NNE \(=\) NOPAT - Net income.

b. Assume that Target's return on equity (ROE) for 2008 is \(18.42 \%\) and its return on net operating assets (RNOA) is \(11.17 \%\). Confirm computations to yield the relation: \(\mathrm{ROE}=\) RNOA + (FLEV \(\times\) Spread).

c. What do your computations of the nonoperating return in parts \(a\) and \(b\) imply about the company's use of borrowed funds?