USE THE PROJECTED INCOME STATEMENT THAT IS AVALABLE ON P. 510 EXHIBIT 9.2. ASSUME THAT THE DATA FOR 2006 FROM P. 510 IS THE HIGH SCENARIO THAT HAS A 50% PROBABLILIY OF BEING MATERIALIZED. CREATE 2 ADDITIONAL SCENARIOS FOR THE ABOVE PROJECTIONS, INCLUDING AN AVERAGE SCHENARIO WITH 30% PROBABILITY AND A LOW SCENARION WITH 20% PROBABILITY. UPON COMPLETION OF THE 3 SCENRIOS, CREATE A PROBABILITY WEIGHTED SCENARIO FOR THE ABOVE 3 SCENARIOS.

510 Financial Statement Analysis Exhibit 9.2 Target Corporation Projected Income Statement (in millions) Forecasting Step 2006 Estimate 105 Estimate $52,204 35,047 17,157 11,741 1,410 493 Income statement Total revenues..... Cost of goods sold 3 Gross profit 2 Selling, general, and administrative expense 4 Depreciation and amortization expense. 5 Interest expense.... 6 Income before tax... 7 Income tax expense....******** 8 Income (loss) from extraordinary items and discontinued operations... 9 Net income... 10 Outstanding shares... Forecasting Assumptions (in percent) Sales growth. Gross profit margin... Selling, general, and administrative expense/Sales Depreciation expense/Gross prior-year PP&E Interest expense/Prior-year long-term debt Income tax expense/Pretax income 3,513 1,328 0 $ 2,185 891 11.455% 32.866 22.490 6.333 5.173 37.809 Given these assumptions, Target's projected income statement for 2006 is presented in Exhibit 9.2. The following are the steps in the projection of this statement: 1. Sales: $52,204 = $46,839 X 1.11455. 2. Gross profit: $17,157 $52,204 x 32.866%. 3. Cost of goods sold: $35,047 = $52,204 - $17,157. 4. Selling general, and administrative: $11,741 = $52,204 X 22.49%. 5. Depreciation and amortization: $1,410 = $22,272 (beginning-period PP&E gross) X 6.333%. 6. Interest: $493 = 59,538 (beginning-period interest-bearing debt) x 5.173%. 7. Income before tax: $3,513 = $17,157 - $11.741 - $1,410 - $493. 8. Tax expense: $1,328 = $3,513 x 37.809%. 9. Extraordinary and discontinued items: none 10. Net income: 2,185 = $3,513 - $1,328. Projected Balance Sheet The balance sheets of Target for 2003-2005 are provided in Exhibit 9.3 together with selected ratios. The forecast of the 2006 balance sheet involves the following steps: 1. Project current assets other than cash, using projected sales or cost of goods sold and appropriate tumover ratios as described below. 2. Project PP&E increases with capital expenditures estimate derived from histor- ical trends or information obtained in the MD&A section of the annual report. 510 Financial Statement Analysis Exhibit 9.2 Target Corporation Projected Income Statement (in millions) Forecasting Step 2006 Estimate 105 Estimate $52,204 35,047 17,157 11,741 1,410 493 Income statement Total revenues..... Cost of goods sold 3 Gross profit 2 Selling, general, and administrative expense 4 Depreciation and amortization expense. 5 Interest expense.... 6 Income before tax... 7 Income tax expense....******** 8 Income (loss) from extraordinary items and discontinued operations... 9 Net income... 10 Outstanding shares... Forecasting Assumptions (in percent) Sales growth. Gross profit margin... Selling, general, and administrative expense/Sales Depreciation expense/Gross prior-year PP&E Interest expense/Prior-year long-term debt Income tax expense/Pretax income 3,513 1,328 0 $ 2,185 891 11.455% 32.866 22.490 6.333 5.173 37.809 Given these assumptions, Target's projected income statement for 2006 is presented in Exhibit 9.2. The following are the steps in the projection of this statement: 1. Sales: $52,204 = $46,839 X 1.11455. 2. Gross profit: $17,157 $52,204 x 32.866%. 3. Cost of goods sold: $35,047 = $52,204 - $17,157. 4. Selling general, and administrative: $11,741 = $52,204 X 22.49%. 5. Depreciation and amortization: $1,410 = $22,272 (beginning-period PP&E gross) X 6.333%. 6. Interest: $493 = 59,538 (beginning-period interest-bearing debt) x 5.173%. 7. Income before tax: $3,513 = $17,157 - $11.741 - $1,410 - $493. 8. Tax expense: $1,328 = $3,513 x 37.809%. 9. Extraordinary and discontinued items: none 10. Net income: 2,185 = $3,513 - $1,328. Projected Balance Sheet The balance sheets of Target for 2003-2005 are provided in Exhibit 9.3 together with selected ratios. The forecast of the 2006 balance sheet involves the following steps: 1. Project current assets other than cash, using projected sales or cost of goods sold and appropriate tumover ratios as described below. 2. Project PP&E increases with capital expenditures estimate derived from histor- ical trends or information obtained in the MD&A section of the annual report