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Economics & Business · Finance & Investment
WACC & Capital Structure Explorer
Students adjust a firm's debt-to-equity mix and watch the weighted average cost of capital respond, including the tax shield benefit of debt and a stylised distress penalty that produces the classic U-shaped optimal capital structure curve. The full interactive is available to licensed Education Universe users.
Undergraduate, ProfessionalExplorerCapital Structure
Learning outcomes
- Calculate the weighted average cost of capital.
- Explain the tax shield on debt.
- Explain why there may be an optimal capital structure.
Teaching guidance
Ask students to explain why WACC first falls and then rises as debt increases.
Use WACC & Capital Structure Explorer with your class
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WACC & Capital Structure Explorer is one of the licensed interactives in The Education Universe. This page describes it; teachers use it in lessons and classes with a licence or the free trial.