Use Excel to calculate the WACC for Southern Company (ticker = SO) using the following two methods: (In computing market values please use the closing price as of 12/31/2019 and the shares outstanding as reported in share statistics).

1. Use the Gordon Growth model and five years of dividend data to calculate the cost of equity you use in the WACC calculation.

2. Use the CAPM with a risk-free rate of 2% an expected return on the market of 9% to calculate the cost of equity you use in the WACC calculation.

3. Suppose the market believes that the growth rate of dividends for Southern Company will be higher than your estimate. What implications does this have for your estimate of the WACC? Give your intuition for the implications and confirm your intuition with calculations.

4. Suppose you are uncertain of the beta for Southern Company. What implications does an increase in the beta have for your estimate of the WACC and the Cost of Equity? Create a data table showing the WACC and Cost of Equity for betas between 0.0 and 1.0 in increments of 0.1.