Only need part B. Answer for A is correct

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 sell the wigs is $20,000. If demand is good (40\% probablity), then the net cash fiows will be $25,000 per year for 2 years, If demand is bad ( 60% probabitity), then the net cash fows 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: $ b. If Fethe makes the imvestment 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 ocourred in Years 1 and 2 will be repeated (so 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 optiar. Assume the variance of the project's rate of retum is 0.2051 and that the risk-free rate is 8%. Do not round intermediate calculations. Round your answers to the nearest dollor: Use computer software pacicages, such as Minitab or Excel, to solve this problem. Value of the growth option: 5 Value of the entire project: $