For each of the following, say whether the statement is true or false, with a brief explanation. An answer that just says "True" or "False" with no explanation will receive no credit.

(a) On the balance sheet of Starbucks Corp., shareholders' equity is listed at negative $5.13 billion. This means that the firm value must be less than the value of the debt.

(b) According to the Adjusted Present Value (APV) model, the overall effect of a reduction in taxes will be to reduce the value of the firm.

(c) If a firm has significant and positive non-operating income, its overall value must be higher than what we obtain from discounting its free cash flows.

(d) Suppose there are no corporate taxes. Then, the WACC of a levered firm must equal its return on unlevered assets (ru).

(e) Depreciation has no effect on cash flow; we subtract it to determine NOPAT, and then add it back to get operating cash flow.