If he were to renew, then he would expect similar cash flows (35% probability of getting $50K in years 3 and 4); (65% probability of getting $10K in years 3 and 4). With an option, Ming Hsu and Wei doesn't actually have to execute the franchise license--he has the option to buy or to decline it.What is the maximum amount that Ming Hsu and Wei should pay for an option for the rights to a franchise at the end of year 2? Hint: Use Decision Tree analysis similar to part a.Remember that we don't have to pay for a franchise, if we think the bad scenario will occur.