Typically,a project will have a higher NPV if the firm immediately expenses depreciation rather than using straight-line depreciation.This is because the total cash flows over the project's life will be higher if depreciation is immediately expensed,other things held constant.

Question

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The method of depreciation (immediate expensing vs. straight-line) does not affect the total cash flows over the project's life because depreciation is a non-cash expense. The difference in depreciation methods affects the timing of tax deductions, which can impact the project's net present value (NPV) through its effect on taxes, but the total cash flows remain unchanged.

Typically,a Project Will Have a Higher NPV If the Firm