Growth Option: Option Analysis Fethe's Funny Hats is consideringselling trademarked, orange-haired curly wigs for University ofTennessee football games. The purchase cost for a 2-year franchiseto 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. Ifdemand 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%. Whatis the expected NPV of the project? Round your answer to thenearest dollar. $ If Fethe makes the investment today, then it willhave the option to renew the franchise fee for 2 more years at theend 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 (soif demand was good in Years 1 and 2, it will continue to be good inYears 3 and 4). Use the Black-Scholes model to estimate the valueof the option. Assume the variance of the project's rate of returnis 0.3587 and that the risk-free rate is 7%. Do not roundintermediate calculations. Round your answers to the nearestdollar. Use computer software packages, such as Minitab or Excel,to solve this problem. Value of the growth option: $ Value of theentire project: $