Growth Option: Decision-Tree Analysis lethe's Funny Hats is considering selling tradernarked, orange- haired curly wigs for University of Tennessee football games, The purchase coit for a 2 -year franchise to sell the wigs is $20,000. If demand is qood (40\% probability), then the net cash flows will be $22,000 per year for 2 years. If demand is bad ( 60% probability), then the net cash flows will be 56,000 per year for 2 years. Fethe's cost of capital is 14%. Do not round intermediate calculations. a. What is the expected NPV of the project? Negative value, if amy, should be indicated by a minus sign, Pound your answer to the nearest dollac $ b. If Fethe makes the investment today, then it will have the option to tenew the franchise fee for 2 more years at the end of Year 2 for an additional payment of $2.00,000. In this case, the cash flows that occurred in Years 1 and 2 will be repented (so i demand was good in Years 1 and 2, it will continue to be good in Years 3 and 4), Write out the decision troe. Note: The franchise fee payment at the end of Year 2 is known, so it should be discounted ot the risk-free rate, which is as. Select the carrect decieion tree. The correct graph is Use decrion tre analysis to caloulate the expected NPV of this project, including the option to continue for an additional 2 years, Negative values, if any should be indicated bra minus sagh, Round your answer to the nearest doliar. 5