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capital investment decisions

Imagine Robert H. Dickinson, President of Carnival Corporation is looking for advice regarding capital investment decisions his company faces in the next five years. Go to the site:

http://www.carnivalcorp.com/Sections/InvestorOverview/CorpGov.aspx

and visit the Carnival Corporation Web site for background information about this company.

What general issues does Carnival Corporation face in their capital investment decisions? What characteristics of the company's fixed assets are most important to such decisions?

Are there any strategic opportunities or threats the company faces in their capital investments?

Provide a list of five pieces of information that you think are relevant to Carnival Corporation's capital investment decisions.

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Imagine Robert H. Dickinson, President of Carnival Corporation is looking for advice regarding capital investment decisions his company faces in the next five years. Go to the site:

http://www.carnivalcorp.com/Sections/InvestorOverview/CorpGov.aspx

and visit the Carnival Corporation Web site for background information about this company.

What general issues does Carnival Corporation face in their capital investment decisions? What characteristics of the company's fixed assets are most important to such decisions?

Capital investment decision for Carnival Corporation must include issues like the size of capital investment, the return on investment and the risk of investment. Please consider the following: The company's investment is usually done in cruise vessels, that is ships, this investment has a lumpiness and the purchase of the ship must meet with industry standards, meet and exceed customer expectations and must match with the brand positioning of Carnival.
Please consider the following investment by Carnival in a cruise vessel. The as-yet-unnamed 2,974-passenger vessel, to be built at an approximate all-in cost of $450-460 million (U.S.), Representing a brand new series, Carnival`s "Conquest-class" ships will be the largest in the "Fun Ship" fleet. Each will feature Farcus` inventive, award-winning interior design and offer a number of expanded amenities and facilities, including the widest variety of entertainment and dining choices in keeping with "Today`s Carnival" theme.
THE FEATURES ARE THE USP OF THE CRUISE SHIP AND DETERMINE THE RETURN ON INVESTMENT
Kindly think in the following terms: Stretching more than three football fields in length (U.S.), the 952-foot-long vessels will house an unprecedented 22 lounges, nightspots and bars, everything from pulsating dance clubs and three-deck-high, 1,500-seat theaters showcasing lavish Las Vegas-style revues to piano bars, jazz clubs, sports bars, wine and caviar bars, cigar bars and a host of live music venues.

Please think of the following : Additionally, 917 of the vessels` 1,487 spacious staterooms will offer an ocean view with 556 of those featuring private balconies. Outside cabins will measure a generous 220 square feet with 42 suites boasting 340 square feet of living space while 10 penthouse suites will offer 430 square feet of luxury.

It is this barrage of facilities that Carnival banks on to ensure an acceptable return on investment. Other amenities featured within the "Conquest-class" include four swimming pools - one with a 214-foot-long cascading water slide and another with a retractable dome in the event of inclement weather - an elaborate 15,000-square-foot health and fitness facility with the latest exercise equipment, workout facilities and private massage/treatment rooms, jogging track, Internet cafe and expansive meeting/conference facilities. You should think of the following: A comprehensive on-board golf program featuring professional instruction aboard ship and during golf excursions, along with netted "driving ranges" and state-of-the-art teaching computers, will be available, as well.
WHAT DICKINSON SAYS ABOUT THE INVESTMENTS
"The Carnival product is constantly evolving and with the new `Conquest-class` we`ve taken everything we`ve learned during ...

Solution Summary

Tips about capital investment decisions are included.

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