Fessenden Corporation has accumulated a significant amount of debt as a result of debt-financed acquisitions of other companies. It is currently considering acquiring one of its competitors, Sonar Corporation. Fessenden's existing debt covenants stipulate that it cannot go beyond a debt to equity ratio of 1.25:1 and a net debt as a percentage of capitalization ratio of 0.90:1. The acquisition of Sonar will cost $80 million. Fessenden's current level of equity is $470 million and its current level of interest-bearing debt is $599 million. Fessenden has a cash balance of $82 million. It will finance the acquisition with a 10-year bond of $80 million that carries a 5% interest rate sold at par. Your answer is partially correct. Determine Fessenden's debt to equity ratio and net debt as a percentage of capitalization ratio prior to the proposed acquisition (Round answers to 2 decimal places, eg. 1.25.) Debt to Equity 1.27:1 Net Debt as a Percentage of Total Capitalization 052:1 m Your answer is partially correct Determine whether Fessenden could acquire Sonar Corporation with the bond issue and still remain in compliance with the existing debt covenants. (Round answers to 2 decimal places, eg. 1.25) 144 1:1 Debt to Equity Net Debt as a Percentage of Total Capitalization 1.35:1 Fessenden cannot acquire Sonar Corporation e Textbook and Media