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ETEC Assessment Practice Test & Exam Prep | Saudi Arabia

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A Saudi corporation has a target capital structure of 40% debt and 60% equity. The cost of equity is 12%, and the pre-tax cost of debt is 6%. If the effective corporate tax rate (or applicable Zakat/tax obligation rate) is 20%, what is the firm's Weighted Average Cost of Capital (WACC)?
Correct Answer:
9.12%

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