4. You are trying to decide between two movie projects to undertake now. You determine that film A has a positive NPV while B has a negative one. Your boss says that this is an easy decision: choose A. You know there are more to these projects though. A is a risky film that could go either way; in one year’s time you will discover whether it is a big hit or a giant flop. You feel this is a function of the political environment though and if you wait out the year, you will have a much better sense which of the two outcomes is likely. The film can be produced quickly but losing a year does have a negative impact on profits. A, as a political film, does not seem to have sequel potential – unlike film B which, as a cartoon, has clear sequel potential. Do you necessarily agree with your boss?
4. You are trying to decide between two movie projects to undertake now. You determine that film A has a positive
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