Question: Hyperion, Inc. currently sells its latest high-speed colour printer, the Hyper 500, for $345.It plans to lower the price to $296 next year. Its cost

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

$345.It plans to lower the price to $296

next year. Its cost of goods sold for the Hyper 500 is $197 per unit, and this year's sales are expected to be 24,000units.

a. Suppose that, if Hyperion drops the price to $296 immediately, it can increase this year's sales by 24% to 29,760 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 $79 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?

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