Dynron Corporation's primary business is natural gas transportation using its vast gas pipeline network. Dynron's assets currently have a market value of $155million. The firm is exploring the possibility of raising $ 40 million by selling part of its pipeline network and investing the $ 40 million in a fibre-optic network to generate revenues by selling high-speed network bandwidth. Whereas this new investment is expected to increase profits, it will also substantially increase Dynron's risk. If Dynron is levered, would this investment be more or less attractive to equity holders than if Dynron had no debt?

A.Less Attractive: Equity holders in a levered firm will prefer that the firm reduce its risk to minimize the possibility if default

B.B. Less attractive: having leverage will raise Dynron's equity cost of capital, making new investments less attractive.

C.No Difference; leverage has no effect on how attractive investment is.

D.More attractive: Equity holders in a levered form will benefit from an increase in the risk of the firms investments.

E.More attractive: Tax benefits of leverage will make the new investment more attractive.