Hyperion, Inc. currently sells its latest high-speed colour printer, the Hyper 500, for

$364.

It plans to lower the price to

$312

next year. Its cost of goods sold for the Hyper 500 is

$208

per unit, and this year's sales are expected to be

22,000

units.

a. Suppose that, if Hyperion drops the price to

$312

immediately, it can increase this year's sales by

29%

to

28,380

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

$78

per year on ink cartridges for the three years, 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 a price drop this year?

Question content area bottom

Part 1

a. Suppose that, if Hyperion drops the price to

$312

immediately, it can increase this year's sales by

29%

to

28,380

units. What would be the incremental impact on this year's EBIT of such a price drop?

The change in EBIT will be

$enter your response here.

(Round to the nearest dollar.)

Part 2

b. Suppose that, for each printer sold, Hyperion expects additional sales of

$78

per year on ink cartridges for the three years, 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 a price drop this year?

The change in EBIT from ink cartridge sales will be

$enter your response here.

(Round to the nearest dollar.)

Part 3

The incremental change in EBIT for the first year is

$enter your response here.

(Round to the nearest dollar.)

Part 4

The incremental change in EBIT for the second year is

$enter your response here.

(Round to the nearest dollar.)

Part 5

The incremental change in EBIT for the third year is

$enter your response here.

(Round to the nearest dollar.)