Do you think Marcus Anderson should use Alan Smith’s WACC for investment decision? Explain.

Please read the case study (Coles Inc) and answer the four questions below.
Questions:

1. Do you think Marcus Anderson should use Alan Smith’s WACC for investment decision? Explain. (25 marks)

2. If you do not agree with Alan’s WACC, calculate your own WACC for Coles and justify your assumptions and calculations. (25 marks)

3. Calculate the costs of equity using CAPM, and the dividend discount model (DDM). Which method is best for calculating the cost of equity?

(20 marks)

4. Should Marcus Anderson invest in the stock of Coles? Explain.