Use the annual report of Carnival Corporation for the 2007 fiscal year to answer the following questions. Specifically, look at the Income Statement (Consolidated Statement of Operations) and the Statement of Stockholders’ Equity for the fiscal year ended November 30, 2007. This information can be found on either the annual report or the SEC 10-K filing at by following the links to Investor Relations.
(a) Assume that Carnival has two investment centers: cruise and tour. (Hint: See page F 21 of the 10-K and consider “Other” to be ‘‘Tours.’’)
(1) Calculate the return on investment for 2005, 2006, and 2007 for each center using the Du Pont model.
(2) Compare year to year for each division and comment on the trend for each division.
(3) Compare the two divisions and comment on the relationship.
(b) Carnival lists corporate expenses that are not assigned to a particular division. If Carnival plans to treat divisions as investment centers, should the corporate expenses be divided between the divisions? If yes, what is the best method?

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