What is a 'Target Return'
A target return is a pricing model that prices a business based on what an investor would want to make from any capital invested in the company. Target return is calculated as the money invested in a venture plus the profit that the investor wants to see in return, adjusted for the time value of money. As a return on investment method, target return pricing requires an investor to work backwards to reach a current price.
BREAKING DOWN 'Target Return'
One of the major difficulties in using this pricing method is that an investor must pick both a return that can be reasonably attained, as well as a time period in which the target return can be reached. Picking a high return and a short time period means that the venture has to be much more profitable in the shortrun than if the investor expected a lower return over the same period, or the same return over a longer period.

Return
The gain or loss of a security in a particular period. The return ... 
Mean Return
1. In securities analysis, it is the expected value, or mean, ... 
Total Return
When measuring performance, the actual rate of return of an investment ... 
Accounting Rate of Return  ARR
The amount of profit, or return, that an individual can expect ... 
Negative Return
This occurs when a company or business has a financial loss or ... 
Abnormal Return
A term used to describe the returns generated by a given security ...

Investing
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The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome. 
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Investing
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The annualized total return is the average return of an investment each year over a given time period. 
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A return of capital is an investment return that is not considered income. 
Investing
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Discover some of the benefits that come from buying and holding stocks for longer periods of time, such as tax savings and risk minimization. 
ETFs & Mutual Funds
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Excess returns are investment returns that exceed a benchmark or index with similar risk. 
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The required rate of return is used by investors and corporations to evaluate investments. Find out how to calculate it. 
Managing Wealth
Understanding Total Returns
Total return measures the rate of return earned from an investment over a period of time. 
Investing
What is a Return?
A return is the gain or loss a security generates over a period of time.

What is the difference between a company's annual return and its annualized return?
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How does the required rate of return affect the price of a stock, in terms of the ...
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What can cause the rate of return to be negative?
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How is the expected market return determined when calculating market risk premium?
Find out how the expected market return rate is determined when calculating market risk premium and how these figures are ... Read Answer >>