Americas Home Product Corp

1. How much business risk does AHP face?
2. How much financial risk would AHP face at each of the proposed debt levels?
3. How much potential value, if any, can AHP create for shareholders at each of the proposed debt levels?
4. What capital structure would you recommend as appropriate for AHP?
5. What are advantages and disadvantages to leveraging the company?
6. How would leverage affect the company's taxes?
7. How would capital markets react to a decision by the company to increase the use of debt in its capital structure? How might AHP implement a more aggressive capital structure policy? What are the alternative methods for leveraging up? In view of AHP's unique corporate culture, what arguments would you make to persuade Mr. Laporte or his successor to adopt your recommendation?