1. These questions are about risk and capital structure

   1. Explain why, in a perfect capital market, the capital structure (the use of equity or debt) does not matter to the value of the firm.

   2. in early 2018, Qualcomm Inc. had $21 billion in debt, total equity capitalization of $78 billion, and of 1.49. Included in Qualcomms assets was $37 billion in cash and cash equivalents. Assume that the risk-free rate of interest is 3% and the market risk premium is 4%.

      1. What is Qualcomms enterprise value?

      2. What is Qualcomms WACC if they wanted to use equity only to pursue a growth strategy? Explain.