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 1, 000 . In this case, the cash flows that occurred in Years 1 and 2 will be repeated (so demand 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 variance of the project's rate of return is 0.3593 and that the risk-free rate is 7%. Do not round Intermediate calculations. Round your answers to the nearest dollar. Use computer software packages, such as Minitab or Excel, to solve this probilin. Value of the growth option: $ Value of the entire project : (if demand is good its 40% prob, if bad 60%. Net cash flow for 2 years is 5000, cost of cap is 10%. Purchase cost 20,000, if demand good 25,000. Npv is 2,561.98