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4. Imagine that you are George Lucas, creator of Star Wars. You are trying to decide whether to film the next two Star Wars movies at the same time. If you film them both at once, you can save money on production costs, but you could lose a lot of money if the first one flops and no one goes to see the second one. Specifically, if you film them both at once, it will cost $250 million, but if you film them separately, they will cost $150 million each. If the first one is successful, it will have revenues of $1 billion and the second one will also have revenues of $1 billion. If the first one fails, it will only have revenues of $75 million and the second one will have revenues of only $25 million. If you decide to film them separately and the first one flops, you don't have to film the second one. The first film has a 50% chance of succeeding and a 50% chance of failing. Assume that all figures are given as present values (you do not need to do any additional discounting).
a. Should you film them both now or separately? Why? (6)