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 ... 
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 ... 
Accounting Rate of Return  ARR
The amount of profit, or return, that an individual can expect ...

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. 
Managing Wealth
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Investing
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How much are your investments actually returning? Find out why the method of calculation matters. 
Investing
Calculating Annualized Total Return
The annualized total return is the average return of an investment each year over a given time period. 
Markets
What's a Return of Capital?
A return of capital is an investment return that is not considered income. 
Investing
4 Benefits of Holding Stocks for the Long Term
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
What are Excess Returns?
Excess returns are investment returns that exceed a benchmark or index with similar risk. 
Managing Wealth
Understanding Total Returns
Total return measures the rate of return earned from an investment over a period of time. 
Trading
How to Calculate Required Rate of Return
The required rate of return is used by investors and corporations to evaluate investments. Find out how to calculate it. 
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?
Understand the importance of calculating a company's annual return and its annualized return, and learn the differences between ... Read Answer >> 
How does the required rate of return affect the price of a stock, in terms of the ...
First, a quick review: the required rate of return is defined as the return, expressed as a percentage, that an investor ... Read Answer >> 
How do I calculate my portfolio's investment returns and performance?
Learn the basic principles underlying the data and calculations used to perform personal rates of return on investment portfolios. Read Answer >> 
What's the difference between absolute and relative return?
Knowing whether a fund manager or broker is doing a good job can be a challenge for some investors. It's difficult to define ... Read Answer >> 
What can cause the rate of return to be negative?
Learn how poor company or sector performance, economic turmoil and inflation can cause the rate of return on an investment ... Read Answer >> 
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 >>