Fin 550 Milestone 1
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Fin 550 Milestone 1
Jasminlyn Miller
Fin 550
Milestone One
I.
Time Value of Money
Target Corporation is an American retail corporation with 1,909 stores in the United States. Target is the eighth-largest retail store with 75.36 billion dollars’ worth of revenue. “With
more than 368,000 employees and stores in all 50 U.S. states and the District of Columbia, Target Corp. is considered one of the largest retailers in the United States.” (Solutions, 2020). Target is part of the S&P 500 Index. Target’s Earnings per Share in 2020 was $6.36 and is projected at $8.64 for 2021. Target headquarters is in Minneapolis, Minnesota. In 1902, Target was originally founded under the name of Goodfellow Dry Goods
Company, by George D. Dayton. They wanted something different and wanted a place people could have a one-stop shopping experience.
“
Following George D. Dayton's death, son George N. Dayton is named President of The Dayton Company.” (Target). In Roseville, Minnesota, the first Target Store was
opened in 1962 and later its name was changed to Dayton Corporation. It wasn’t until the 2000’s when Target got its name Target. Question 1.
Interest Rate
5%
FCF - Years
2022
2021
2020
FCF in dollars*
$5,108,000 $7,918,000 $4,153,000
Pv*
$(4,864,762)
$(7,540,952
)
$(3,955,238
)
Total Pv*
$(16,360,952
)
*In millions
Question 2.
Interest Rate
5%
FCF - Years
2022
2021
2020
FCF in dollars*
$4,597,200 $7,126,200 $3,737,700
Pv*
$(4,378,286)
$(6,786,857)
$(3,559,714)
Total Pv*
$(14,724,857
)
*In millions
Interest Rate
5%
3%
FCF - Years
2020
2021
2022
2023
2024
2025
FCF in dollars*
$3,737,700 $7,126,200 $4,597,200 $4,735,116 $4,877,169 $5,023,485
Pv*
$(3,559,714)
$(6,786,857
)
$(4,378,286)
$(4,597,20
0)
$(4,597,20
0)
$(4,877,16
9)
*In millions
Total Pv*
$(28,796,427)
After doing the analysis it shows that risk reduction increases the present value of a company. Changing the risk in present value means that the cash flow of a company present value increase.
This is due to more certainty around risk reduction. “Risk reduction deals with mitigating potential losses by reducing the likelihood and severity of a possible loss.” (Team, 2021). It’s
recommended that Target should not be purchased at the calculated future price of $5,023,48. The trend shows that Future value will decrease and free cash flow will rise.
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Reference:
Intellect. (2022). Www.mergentonline.com.ezproxy.snhu.edu
. 00-696-1700. TARGET CORPORATION. Retrieved June 18, 2022, from http://www.mergentonline.com.ezproxy.snhu.edu/companydetail.php?compnumber=886 Team, T. I. (2021, September 30). Risk avoidance vs. risk reduction: What's the difference?
Investopedia. Retrieved June 18, 2022, from https://www.investopedia.com/ask/answers/040315/what-difference-between-risk-
avoidance-and-risk-reduction.asp Solutions, D. (Ed.). (2020, November 20). Target Corp.
Companies History - The biggest companies in the world. https://www.companieshistory.com/target-corp/
. Target. (2021). 2020 Annual Report Target Corporation . https://investors.target.com/static-
files/717a6df4-172c-484e-afbd-611131a7ce7b. Finance, Y. (2022, June 19). Target corporation (TGT) stock price, news, quote & history
. Yahoo! Finance. Retrieved June 18, 2022, from https://finance.yahoo.com/quote/TGT?
p=TGT&.tsrc=fin-srch
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