Question 17: How would you expect the (tax adjusted) weighted average cost of capital to change if the cash is paid out as an exceptional dividend? Please discuss. Does it make a di'erence if there is still debt on the balance sheet? You can again make the assumption that there is no taxation. Question 1 8: What is in your opinion the best payout strategy: Should ST Microelectronics maintain a high level of cash on its balance sheet or should they give this cash to shareholders? Please answer this question by rst explaining the consequence of a cash payout on shareholder wealth in the perfect Modigliani Miller world without taxation and then giving two reasons for why reality is more complex