Growth Ogtion: Opuion Anatysis Fethe's Funwy Hats is concidenng seling tradecharked, orange haired curly wigs for University of Tennessee football ganies. The purchase cost for a 2 -year franchise to seil the wigs is $20,000. If deriand is good (40\% probabisty), then the net cash flows will be $25,000 per year for 2 years. If demand is bad ( 60% probability), then the net: cash flows will be 55,000 per year for 2 years. Fethe's cost of capital is 10%. a. What is the expected NWY of the project? Round your answer to the nearest dellat. 5 b. If Fethe make the investment today, then it will have the option to renew the fronchise fee far 2 more years at the end of Year 2 for an additienal payment of $20,000. In this case, the cast flows that oceurrod in Years 1 and 2 will be repeated (soir demand was good in Years 1 and 2, it wall continue to be dood in Years 3 and 4), U4e the tlack-5droles model to estimate the value of the opton. Assume the vanance of the project s rate of retuin is 0.3815 and that the nsk-free rote is 8%. Do not round interthediate calculations. Round your answers to the nearect dolfar. Use campiter soltware packages, such as Minitab or Excel- to solve this problem. Value of the growth option: 5 Vaiue of the entare peojecti $