Please help with these questions.
Question: What are the important differences in the way operating risk (versus financial risk) enters into the consideration of a capital budgeting project?
Phyllis believes that the firm should use straight-line depreciation for a capital project, because it results in higher net income during the early years of the project's life. Joanna believes that the firm should use the modified accelerated cost recovery system depreciation because it reduces the tax liability during the early years of the project's life. Assuming you have a choice between depreciation methods, whose advice should you follow? Why?