Hyperion Inc., currently sells its latest high-speed colour printer, the Hyper 500, for $345. Its cost of goods sold for the Hyper 500 is $197 per unit, and this year's sales (at the current price of $345) are expected to be 16,000 units. Hyperion plans to lower the price of the Hyper 500 to $296one year from now.

a. Suppose Hyperion considers dropping the price to $296 immediately, (rather than waiting one year). By doing so it expects to increase this year's sales by 27% to 20,320 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 $65 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin of 68% 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)?