Imagine that you are the producer of Harry Potter films. You are trying to decide whether to

film the next two Harry Potter movies at the same time. $($Yes$,$ they are making a comeback.$)$ 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 a total of $$500$ million, but if you film them separately, they will

cost $$350$ million each. If the first one is successful, it will have revenues of $$1\mathrm{.}2$ billion and

the second one will have revenues of $$2$ billion. If the first one fails, it will only have revenues

of $$250$ million and the second one will have revenues of only $$50$ 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$).$ Should you film

both of them now or film them separately? Why?

Film them together now as NPV $=$$$1,200$ million

Film them separately as NPV $=$$$1,200$ million

Film them together now as NPV $=$$$1,250$ million

None of the options