Ivanhoe Corporation has accumulated a significant amount of debt as a result of the recent launch of a constellation of satellites. It is currently considering acquiring and launching its largest stateof-the-art observation satellite, SkyEye. Ivanhoe’s existing debt covenants stipulate that it cannot go beyond a debt-to-equity ratio of 1.64:1 and a net debt as a percentage of capitalization ratio of 0.84:1. The acquisition of SkyEye will cost $275 million. Ivanhoe’s current level of equity is $490 million, and its current level of interest-bearing debt is $932.7 million. Ivanhoe has a cash balance of $85 million. It will finance the acquisition with a 15-year bond of $215 million that carries a 6% interest rate sold at par.


Determine whether Ivanhoe could acquire SkyEye with the bond issue and remain in compliance with the existing debt covenants. (Round answersto 2 decimal places, e.g. 1.25:1.)
Debt to equity :1
Net debt as a percentage of total capitalization :1