Forecasting Incremental Earnings

1. Forecasting Incremental Earnings Hyperion, Inc., currently sells its latest high-speed color printer, the Hyper 500 , for $350. Its cost of goods sold is $200 per unit, and currently $20,000 units are sold every year. To boost sales, the company plans to lower the price to $300 next ycar. (a) Suppose that the price drop is expected to increase yearly sales by 25% to 25,000 units. What would be the incremental impacts on next year's EBIT of such a price drop? b) Suppose that for each printer sold, Hyperion expects additional sales of $75 per year on ink cartridges, and the Hyperion has a gross profit margin of 70% on ink cartridges. What is the incremental impact on next ycar's EBIT