Companies often come across projects that have positive NPV opportunities in which the company does not invest. Companies must evaluate the value of the option to invest in a new project that would potentially contribute to the growth of the firm. These options are referred to as growth options.

Shoe Building Inc. is considering a three$-$year project that will require an initial investment of $$55,000.$ It has estimated that the annual cash flows for the project under good conditions will be $$70,000$ and $$10,000$ under bad conditions. The firm believes that there is a $60\%$ chance of good conditions and a $40\%$ chance of bad conditions.

If the firm is using a weighted average cost of capital of $13\%,$ the expected net present value $($NPV$)$ of the project is $$53,613$grad. $($Note: Do not round intermediate calculations and round your answer to the nearest dollar.$)$

Shoe Building Inc. wants to take a potential growth option into account when calculating the project's expected NPV$.$ will be able to invest $$5,000$ in year $2$ to generate an additional cash flow of $$18,000$ in year $3.$ If conditions are bad, further investments in the project.

Using the information from the preceding problem, the expected NPV of this project$-$when taking the growth option into account$-$is $$61,686$grad.

$($Note: Do not round intermediate calculations and round your answer to the nearest dollar.$)$

Shoe Building Inc.$\text{'}$s growth option is worth

$.($Note: Do not round intermediate calculations and round your answer to the nearest dollar.$)$