Question: 1. How much business risk does Tonka face? 2. How much potential value, if any, can Tonka create for its shareholders at each of the

1. How much business risk does Tonka face?

2. How much potential value, if any, can Tonka create for its shareholders at each of the levels of debt?

3. How would leveraging up affect the company?s taxes?

4. How would the capital markets react to a decision by the company to increase the use of debt in its

capital structure?

5. What capital structure do you think is appropriate for Tonka? Why?

6. What are alternative tactics for leveraging up?

7. What arguments would you make to persuade Tonka?s management to adopt your recommendation

1. How much business risk does Tonka face?2. How much potential value,

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