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What would be the incremental impact on ebit

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Question - Hyperion? Inc., currently sells its latest? high-speed color? printer, the Hyper? 500, for $341. Its cost of goods sold for the Hyper 500 is $195 per? unit, and this? year's sales? (at the current price of $341?) are expected to be 15,000 units. Hyperion plans to lower the price of the Hyper 500 to $292 one year from now.

a. Suppose Hyperion considers dropping the price to $292 ?immediately, (rather than waiting one? year). By doing? so, it expects to increase this? year's sales by 29% to 19,350 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 $84 per year on ink cartridges for the? three-year life of the? printer, and Hyperion has a gross profit margin of 78% 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)?

Reference no: EM133020509

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