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HBS Case American Home Products Corporation 1. The case uses some questionable measures and assumptions. Please discuss: o The case measures leverage using book values.

HBS Case American Home Products Corporation

1. The case uses some questionable measures and assumptions. Please discuss: o The case measures leverage using book values. What is leverage if we use investors valuations (market values), to the extent that they are available? o The case mentions that stocks will be repurchased at $30 per share and that the interest rate is 14%. Are these reasonable assumptions for all considered leverage ratios?

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