Erna Corp. has 8 million shares of common stock outstanding. The current share price is $73, and the book value per share is $7. Erna Corp. also has two bond issues outstanding. The first bond issue has face value of $85 million, has a 7 percent coupon, and sells for 97 percent of par. The second issue has a face value of $50 million, has an 8 percent coupon, and sells for 108 percent of par. The first issue matures in 21 years, the second in 6 years. 

a. What are Erna's capital structure weights on a book value basis?

b. What are Erna's capital structure weights on market value basis? 

c. Which are more relevant, the book or market value weights? Why?

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If the heat is provided by burning methane in air calculate the amount of methane (in g methane per kg Al) needed to heat the aluminium from 25°C to 1100 K. What is the efficiency of the process? (20 + 2 marks). For this calculation, assume complete combustion of the methane and that the stoichiometric amount of oxygen is used (i.e., the amount of oxygen indicated in the above equation: 2 moles O₂ per mol CH4). Assume also that air and methane enter the furnace at 25°C and that the combustion gases leave the furnace at 1100 K. Note: air consists of 79 vol% N₂ and 21vol % O₂. We can visualise the process as follows: INPUT CHRI Quel CH,+ air 298.15 K There are two main steps in the calculation: a. Perform a heat balance on the combustion process using a table of the form: T AN Amount -AR(298)-(H-H(298)) Total I (k) (347 Reactants (at 7.) (K) (mol) (k 298.15 -1.00 298.15 7 T 298.15 Y DE 6,8(298) #-I(298) (kl) 1100 1 7 1100 19 1100 17 Nat Total In OUTPUT [NEKI (2) H₂000) Total outs Flame SURPLUS/DEFICIT Scrap aluminium 7 ? 7 7 (kl) 7 7 7 > 7 7 7 7 CO,+HO-N, 1100 K ? Products (at Tan) AR AND- Elemental species (at 298.15K) A---AN? + ANT mi The principle of a heat balance is illustrated in the diagram above. The Input species are first cooled, if necessary to 298.15 K (column 5); the Input species are then decomposed into their constituent elements at 298 K then recombined to form the Output species at 298 K (column 4); finally, the Output species are brought to the Output temperature (column 5). The total sum of the enthalpy changes for these steps gives the Surplus or Deficit of enthalpy (heat). You will require two forms of enthalpy: the enthalpy change of substances as they are heated or cooled to 298 K and the enthalpy of formation of substances (A/H) at 298 K. Note: Input values are negative and Output values are positive. b. The surplus heat is the energy available to be transferred to the aluminium to melt it; the remaining heat is carried out of the furnace in the flue gas. Use the total heat surplus (per mol of methane) to calculate how much methane needs to be burned to raise the temperature of the aluminium to 1100 K. c. What measure could you use to evaluate the efficiency of this process? What is the efficiency of the process calculated using this measure? If the heat is provided by burning methane in air calculate the amount of methane (in g methane per kg Al) needed to heat the aluminium from 25°C to 1100 K. What is the efficiency of the process? (20 + 2 marks). For this calculation, assume complete combustion of the methane and that the stoichiometric amount of oxygen is used (i.e., the amount of oxygen indicated in the above equation: 2 moles O₂ per mol CH4). Assume also that air and methane enter the furnace at 25°C and that the combustion gases leave the furnace at 1100 K. Note: air consists of 79 vol% N₂ and 21vol % O₂. We can visualise the process as follows: INPUT CHRI Quel CH,+ air 298.15 K There are two main steps in the calculation: a. Perform a heat balance on the combustion process using a table of the form: T AN Amount -AR(298)-(H-H(298)) Total I (k) (347 Reactants (at 7.) (K) (mol) (k 298.15 -1.00 298.15 7 T 298.15 Y DE 6,8(298) #-I(298) (kl) 1100 1 7 1100 19 1100 17 Nat Total In OUTPUT [NEKI (2) H₂000) Total outs Flame SURPLUS/DEFICIT Scrap aluminium 7 ? 7 7 (kl) 7 7 7 > 7 7 7 7 CO,+HO-N, 1100 K ? Products (at Tan) AR AND- Elemental species (at 298.15K) A---AN? + ANT mi The principle of a heat balance is illustrated in the diagram above. The Input species are first cooled, if necessary to 298.15 K (column 5); the Input species are then decomposed into their constituent elements at 298 K then recombined to form the Output species at 298 K (column 4); finally, the Output species are brought to the Output temperature (column 5). The total sum of the enthalpy changes for these steps gives the Surplus or Deficit of enthalpy (heat). You will require two forms of enthalpy: the enthalpy change of substances as they are heated or cooled to 298 K and the enthalpy of formation of substances (A/H) at 298 K. Note: Input values are negative and Output values are positive. b. The surplus heat is the energy available to be transferred to the aluminium to melt it; the remaining heat is carried out of the furnace in the flue gas. Use the total heat surplus (per mol of methane) to calculate how much methane needs to be burned to raise the temperature of the aluminium to 1100 K. c. What measure could you use to evaluate the efficiency of this process? What is the efficiency of the process calculated using this measure?

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a Ernas capital structure weights on a book value basis are Common stock 8000000 shares x 7 book val... View the full answer