Question Help Dynron Corporation's primary business is natural gas transportation using its vast gas pipeline network. Dynron's assets currently have a market value of $149 million. The firm is exploring the possibility of raising $59 million by selling part of its pipeline network and investing the $59 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? (Select the best choice below.)

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

B. More attractive: Equity holders in a levered firm will benefit from an increase in the risk of the firm's investments.

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

D. More attractive: The tax benefits of leverage will make the new investment more attractive.

E. No difference: Leverage has no effect on how attractive the investment is.