XYZ Corporate starts with $20,000 book value of equity capital and zero debt. The ROE for the company is 15% and the required rate of return for the company is 12%. There are 500 shares outstanding. Now XYZ Corporation decides that it will always reinvest 60% of earnings back in the company and pay out 40% of earnings each year in dividends to the shareholder. Thus, dividends for this company will grow at a constant rate.

1g. How much cash flow does the company earn in the second year?

1h. What are the earnings per share (EPS) in the second year?