Hackaroni AG, a profitable enterprise software company, has…
Hackaroni AG, a profitable enterprise software company, has developed a breakthrough AI-powered platform that automates complex business processes across manufacturing and logistics. The platform will require €200 million to scale infrastructure, hire engineers, and launch commercially. The company’s data science team has extensive pilot program results from Fortune 500 clients showing the platform reduces operational costs by 35% and increases productivity by 40%, but these results have not yet been made public. The company is considering two financing options: Option 1: Issue new shares to raise €200 million (diluting existing shareholders by 20%) Option 2: Issue €200 million in bonds at 6% interest rate Management knows the AI platform will likely generate €50 million in annual profits, but the market is uncertain about the technology’s commercial potential. Which statement is correct?