Growth Option: Option Analysis Fethe's funmy thats is considering sellang 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 $25,000 per year for 2 years. If dernand is bad ( 60% probabifity). then the net cash flows will be $5,000 per year for 2 years. Fethe's cost of captal is 10%. a. What is the expected NPV of the project? Round your answer to the nearest dollar: s b. If Fethe makes the investment today, then it will have the option to renew the frandise 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 2,18 will continue to be good in Years 3 and 4). Use the Black-Scholes model to estimate the value of the option. Assume the variance of the project's rate of return is 0.3767 and that the risk-free rate is 8%, Do not round intermediate calculations. Round your answers to the nearest dollar. Use computer soltware packages, such as Mintab or Excel, to solve this problem. value of the growth options s Value of the entire projecti $