Erna Corp. contain 9 million shares of common stock outstanding. Present share price is $88, and book value per share is $7. Erna Corp. also has 2 bond issues outstanding. First bond issue has the face value of $80 million, has the coupon of 5%, and sells for 98% of par. Second issue has the face value of $55 million, has the coupon of 6% , and sells for 106% of par. First issue matures in twenty years, second in eight years.
i) Find Erna's capital structure weights on a book value basis?
ii) Find Erna's capital structure weights on the market value basis?
iii) Which are more appropriate, book or market value weights?