Solution a. Change in EBIT = Gross prot with price drop - Gross prot without price drop = 25,000 x {300 - 200) - 20,000 x(350 - 200) = - $500,000 b. Change in EBIT from Ink Cartridge sales = 25,000 x $75 x 0.70 20,000 x $75 x 0.70 = $262,500 Therefore, incremental change in EBIT for the next 3 years is Year 1: $262,500 500.000 = $237,500 Year 2: $262,500 Year 3: $262,500