Question: Hyperion, Inc. currently sells its latest high-speed colour printer, the Hyper 500, for . It plans to lower the price to next year. Its cost

Hyperion, Inc. currently sells its latest high-speed colour printer, the Hyper 500, for . It plans to lower the price to next year. Its cost of goods sold for the Hyper 500 is per unit, and this year's sales are expected to be units.

a. Suppose that, if Hyperion drops the price to $285 immediately, it can increase this year's sales by 24% to 26,040 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 $70 per year on ink cartridges for the three years, and Hyperion has a gross profit margin of 79% on ink cartridges. What is the incremental impact on EBIT for the next three years of a price drop this year?

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