Microsoft Corporation is experiencing a period of rapid growth. Earnings and dividends are expected to grow at a rate of 20 percent during the next two years, at 15 percent in the third year, and at a constant rate of 7 percent thereafter. Microsofts last dividend was $2.00, and the required rate of return on the stock is 12 percent. Show your work.

a. Calculate the fair market value of the stock today.

b. Calculate the dividend yield and capital gains yield for Years 1, 2, and 3. Hint: complete the following table.

	Year 1	Year 2	Year 3
Dividend yield
Capital gains yield