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2. The following table provides summary data for Target on May 2, 2014, per finance.yahoo.com (in billions). Analysts often use the observed PB ratio to
| 2. The following table provides summary data for Target on May 2, 2014, per finance.yahoo.com (in billions). Analysts often use the observed PB ratio to infer market expectations regarding a companys future performance based on assumptions. Assuming that the markets expectation of Targets future ROE is consistent with its past performance and its discount rate is expected to be 7.5%, compute Targets implied future growth rate. | |||||||
| Target | |||||||
| Market value of equity | $39.30 | ||||||
| Book Value of Equity | $16.49 | ||||||
| ROE | 11.46% | ||||||
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