TU I! 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, Fessender'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 $75 million. Fessenden's current level of equity is $480 million and its current level of interest-bearing debt is $606 million. Fessenden has a cash balance of $78 million. It will finance the acquisition with a 10-year bond of $75 million that carries a 5% interest rate sold at par. 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 Net Debt as a Percentage of Total Capitalization 31 e Textbook and Media 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.) Debt to Equity Net Debt as a Percentage of Total Capitalization 1 Fessenden v acquire Sonar Corporation e Textbook and Media The distinction between senior and subordinated debt is associated with O general debenture bonds. O mortgage bonds. O collateral trust bonds. O commercial bonds