Depreciating a fixed asset creates future tax deductions. The impact of these tax deductions on the NPV cash flow of a project for a taxable corporation is:

a. Depreciation impacts the replacement decision for capital projects but not the NPV.

b.Increases NPV because the non-discounted cash inflow from the tax deduction is included.

c.There is no impact. Depreciation is a non-cash expense and is not included in the NPV analysis.

d.Increases NPV because the discounted cash inflow from the tax deduction is included.