Bob just finished a new movie script. Paramount offers to buy the script, for either...
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Bob just finished a new movie script. Paramount offers to buy the script, for either (a) $1,000,000 or (b) 3% of the movie's profits. There are two decisions the studio will have to make. The first is to decide if the script is good or bad, and the second if the movie is good or bad. There is a 75% the script is bad. If the movie is bad, the studio does nothing. If the script is good, the studio will shot the movie. After the movie is shot, the studio will review it, and there is a 60% the movie is good. If the movie is bad, the movie will not be promoted. If the movie is good, the studio will promote it heavily and the expected profit is $200 million. If the movie is bad, the movie will make 50 million. Calculate the expected profit on this film. (Enter full value, e.g. 5 million should be 5,000,0000
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