This invention concerns a target determining apparatus that has particular application to a navigation system for an automated guided vehicle. The target determining apparatus has a laser diode light source which is scanned toward retroreflective targets. A photoreceptor in the apparatus detects reflected light returning from a target. The light source is modulated at either a constant or binary-coded frequency. Signals from the photoreceptor are demodulated in accordance with the chosen modulation scheme, resulting in a markedly improved signal-to-noise ratio. This permits either increased amplification of the signal or a reduced threshold for determining a valid target signal. In either case, the range of the apparatus is increased, without increasing the power of the light source, because weaker signals from more distant targets can be reliably distinguished from background noise. The power of the light source may be reduced if desired to limit the range of the apparatus in instances where more than one target might otherwise be within range.