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# General Mills

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1. General Mills will receive \$27,500 a year for the next 10 years as a payment for a weapon he invented. If a 12 percent rate is applied, should he be willing to sell out his future rights now for \$160,000?

2. Determine the amount of money in a saving account at the end of five years, given an initial deposit of \$3, 000 and an 8 percent annual interest rate when interest is compounded (a) annually, (b) semiannually, and (c) quarterly.

3.Kelly Greene has a contract in which she will receive the following payments for the next five years: \$3,000, \$4,000, \$5,000, \$6,000, and \$7,000. She will then receive an annuity of \$9,000 a year from the end of sixth through the end of the 15th year. The appropriate discount rate is 13 percent. If she is offered \$40,000 to cancel the contract, should she do it?

4. Kay Mart has purchased an annuity to begin payment at the end of 2009 (the date of the first payment). Assume it is now the beginning of 2007. The annuity is for \$12,000 per year and is designed to last eight years.
If the discount rate for the calculation is 11 percent, what is the most she should have paid for the annuity?

5. If you borrow \$9,725 and are required to pay back the loan in five equal annual installments of \$2,500, what is the interest rate associated with the loan?

#### Solution Preview

1. General Mills will receive \$27,500 a year for the next 10 years as a payment for a weapon he invented. If a 12 percent rate is applied, should he be willing to sell out his future rights now for \$160,000?

PVA = W x 1 - 1 where PVA is the present value
(1 + i)n W is the amount received each quarter
i i is the interest rate
n is the period

PVA = 27,500 x 1 - 1
(1 + 0.12)10
0.12

PVA = 155,381.13

He should be willing to sell out his future rights now for \$160,000 because it is higher than the present value of all payment received in the next 10 years.

2. Determine ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer if a 12 percent rate is applied, should he be willing to sell out his future rights now for \$160,000.

\$2.19

## General Mills strategic choices

STRATEGIC CHOICES

1) What is your opinion on ANTONIO'S ANSWER to the QUESTIONS below?

General Mills target scope is industry wide (broad), while the company's main advantage is product uniqueness. Therefore, General Mills utilizes the differentiation strategy in regards to the Porter's Generic Strategy. The company's top executives are constantly focusing on not just one specific brand or product, they focus on all brands. The company's top executives are placing great efforts to ensure each of the company's brands quality and brands loyalty are constantly improving in order to maintain competitive advantage. General Mills' products are offered to their consumers at considerable competitive prices, but the company main purpose is not to sell its products are lower prices that the competitors. On the other hand, the company is more concerned about product quality, and brand loyalty that keeps customers going back to stores to buy their products instead of other substitute products available at a lower price.

QUESTIONS???????????????What are General Mills' corporate-level strategies? What generic Porter strategy does the company follow? Are General Mills' strategic choices aligned with the Porter generic strategy you believe the company follows?

2) What is your opinion on MARK'S ANSWER to the QUESTIONS above?