Hyperion, Inc. currently sells its latest high-speed color printer, the Hyper 500, for $350. Its cost of goods sold for the Hyper 500 is $150 per unit, and this year's sales are 10,000 units. Hyperion plans to lower the price to $300 per unit next year and, the company expects this can increase the sales of next year to 15,000 units. If Hyperion were to keep the price at $350, then the company expects the sales would still be 10,000 units for next year. (In both cases, the cost per unit sold would remain at $150 next year.) The incremental) depreciation expense is $150,000 per year and the marginal tax rate is 35%. What is the incremental EBIT of such a price drop for next year? 

Answer rating: 100% (QA)

Current year Sales price 350 per unit Sales quantity 10000 units Re... View the full answer