Defines total average cost of capital (TACC) TACC = ((Cost of Debt x Debt value/firm value) + (Cost of equity x Equity value/firm value) + (Cost of Insurance x Insurance value/firm value). This model helps determine how capital can be used to increase efficiency by using all sources of capital “Insurative” recognizes that each form of capital carries some risk of the firm and can therefore be thought of as insurance or a derivative. Insure : (01) To grant an insurance (02) To obtain an insurance.