GreenEnergy AG is a profitable renewable energy company cons…
GreenEnergy AG is a profitable renewable energy company considering how to finance a new €100 million wind farm project. The company is evaluating two financing options: Option A: Finance entirely with equity (€100M equity, €0 debt) Option B: Finance with €60M equity and €40M debt at 5% annual interest rate The wind farm is expected to generate €15 million in annual earnings before interest and taxes (EBIT) indefinitely. The corporate tax rate is 30%. Assume the debt is perpetual and that interest payments are tax-deductible. Which statement is correct?