Fethe's Funny Hats is considering selling trademarked, orange$-$haired curly wigs for University of Tennessee football games. The purchase cost for a $2-$year franchise to sell the wigs is $$20,000.$ If demand is good $(40\%$ probability$),$ then the net cash flows will be $$23,000$ per year for $2$ years. If demand is bad $(60\%$ probability$),$ then the net cash flows will be $$6,000$ per year for $2$ years. Fethe's cost of capital is $13\%.$ Do not round intermediate calculations.

What is the expected NPV of the project? Negative value, if any, should be indicated by a minus sign. Round your answer to the nearest dollar.

$

$-80,923$

If Fethe makes the investment today, then it will have the option to renew the franchise fee for $2$ more years at the end of Year $2$ for an additional payment of $$20,000.$ In this case, the cash flows that occurred in Years $1$ and $2$ will be repeated $($so if demand was good in Years $1$ and $2,$ it will continue to be good in Years $3$ and $4).$ Write out the decision tree. Note: The franchise fee payment at the end of Year $2$ is known, so it should be discounted at the risk$-$free rate, which is $7\%.$

Select the correct decision tree.

The correct graph is

D

$.$

Use decision$-$tree analysis to calculate the expected NPV of this project, including the option to continue for an additional $2$ years. Negative values, if any, should be indicated by a minus sign. Round your answer to the nearest dollar.

$