Growth Option: Option Analysis 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 5 ell 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 demand is bad (60% probability), then the net cash flows will be $5,000 per year for 2 years. Fethe's cost of capital is 10%. a. What is the expected NPV of the project? Round your answer to the nearest dollar. $3 b. If Fethe makes the inyestment 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 , t will continue to be good in Years 3 and 4 ). Use the Black.Scholes model to estimate the vatue of the option. Assume the variance of the project's rate of return is 0.3815 and that the risk-free rate is 8%. Do not round intermediate calculations. Round your answers to the nearest dollaci Use compuker software packages, such as Minitab or Excel, to solve this probiem. Value of the growth option: 5 Value of the entire project: $