Question

Hyperion​ Inc., currently sells its latest​ high-speed colour​ printer, the Hyper​ 500, for $ 342. Its cost of goods sold for the Hyper 500 is $ 195 per​ unit, and this​ year's sales​ (at the current price of $ 342​) are expected to be 19,000 units. Hyperion plans to lower the price of the Hyper 500 to $ 293 one year from now. a. Suppose Hyperion considers dropping the price to $ 293 ​immediately, (rather than waiting one​ year). By doing so it expects to increase this​ year's sales by 27 % to 24,130 units. What would be the incremental impact on this​ year's EBIT of such a price​ drop? b. Suppose that for each printer​ sold, Hyperion expects additional sales of $ 76 per year on ink cartridges for the​ three-year life of the​ printer, and Hyperion has a gross profit margin of 65 % on ink cartridges. What is the incremental impact on EBIT for the next three years of dropping the price immediately​ (rather than waiting one​ year)? The incremental change in EBIT for the first year is ​?? The incremental change in EBIT for the second year is ​? ​(Round to the nearest​ dollar.) The incremental change in EBIT for the third year is ​? ​(Round to the nearest​ dollar.)

Answer 1