FINEDGE LEARNING
Full WACC teaching model

Interactive Weighted Average Cost of Capital WACC

Students can now adjust debt, preferred stock, and equity inputs and see the full weighted average cost of capital update in real time. The visualization starts on an even line and then lets each financing source rise or fall based on its contribution to total WACC.
Formula
WACC = wd × rd × (1 - T) + wp × rp + we × re

Interactive contribution view

The larger the contribution, the lower the disc drops. Equal contributions line up evenly.
Capital mix total: 100.0%
Floating WACC contribution discs
EVEN CONTRIBUTION LINE 1.80% DEBT 1.60% PREFERRED 7.20% EQUITY DEBT FORMULA wd × rd × (1 - T) After-tax borrowing contribution PREFERRED FORMULA wp × rp Preferred stock contribution EQUITY FORMULA we × re Required equity return contribution
Debt summary
Weight 30.0% · Cost 6.0%
After-tax debt cost 4.50% with a 25.0% tax rate.
Preferred summary
Weight 20.0% · Cost 8.0%
Preferred stock is not tax-adjusted in the standard WACC formula.
Equity summary
Weight 50.0% · Cost 12.0%
Equity reflects the required return demanded by shareholders.
After-tax debt cost
4.50%
Debt cost of 6.0% reduced by the tax shield.
Blended WACC
10.30%
This is the overall weighted average cost of capital.
Debt contribution
1.35%
wd × rd × (1 - T)
Preferred contribution
1.60%
wp × rp
Equity contribution
6.00%
we × re
Capital structure interpretation
Equity is contributing the most to the blended WACC, while the tax shield keeps debt lower on an after-tax basis.
Largest contributor
Equity dominates
Its disc drops the farthest because its weighted contribution is the largest.
Tax shield value
0.45%
This is the weighted value created by deductibility of interest.
Full WACC view
Debt 30.0% · Preferred 20.0% · Equity 50.0%
All three financing sources are included and always sum to 100 percent.

Student controls

Controls now follow the formula order. One weight can be locked at a time, and the other two rebalance so the total stays at 100 percent.
Debt weight
Share of capital financed by debt.
30.0%
Debt cost
Pre-tax borrowing cost.
6.0%
Tax rate / tax shield
Higher tax rates increase the value of the shield on debt.
25.0%
Preferred weight
Share of capital financed by preferred stock.
20.0%
Preferred cost
Expected return demanded by preferred investors.
8.0%
Equity weight
Share of capital financed by common equity.
50.0%
Equity cost
Expected return demanded by equity investors.
12.0%

Capital mix

Debt plus preferred plus equity always equals 100 percent.
Locked weight: None
Debt
30.0%
Share financed by debt
Preferred
20.0%
Share financed by preferred stock
Equity
50.0%
Share financed by common equity
Capital structure Total = 100%
This version includes the full WACC formula. Debt receives the tax adjustment, while preferred stock and equity enter the formula without the debt tax shield. To keep the capital structure intuitive for students, equity updates automatically as the residual share.