Growth Option: Optiea Analysis eethe's Funny Hats is considering selling trademarked, orange-haired curfy wigs for University of Tennessee foctball games. The purchase cost for a 2 -year franchise to sell he wigs is $20,000. If dernand is good (40\% probability), then the net cash flows will be $25,000 per year for 2 years. If demand is bad (60\% probability), then the net. eash flows will be 55,000 per year tor 2 years. Fethe's cost of cap-tal is 10%. a. What is the expected NPV of the project? Round your answer to the nearest dollar, 5 b. 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, ooo. In this case, the cash flows that occurred in Years 1 and 2 will be repeated (oo if dernand was good in Years-1 and 2 , it will continue to be good in Years 3 and 4 ). Use the Black-Scholes model to estimate the value of the option. Assume the varance of the project's rate of retum is 0.3308 and that the risk-tree rate is 6%. Do not round interrnediate calculations. Round your answers to the nearest dollaf. Use computer soltware packages, such as Minitab or txci, to solve this problem. Value of the growth eption:'s Value of the entire project: $