In this video, we break down the extended formula for the Weighted Average Cost of Capital (WACC), which includes the cost of equity, debt, and preferred shares. While you're likely familiar with the basic WACC formula, this version adds a step to account for the cost of preferred shares. We walk through the components—cost of equity, cost of debt, and cost of preferred shares—showing you how to calculate each of them and how they fit into the overall capital structure of a firm. The video explains how each portion of financing (equity, debt, and preferred shares) contributes to the firm's cost of capital and the importance of calculating these costs accurately for business and financial decision-making.