Question
Future Co. produces and commercializes 1 million units a year of the light notebook SPEED. The firm is considering introducing a new headset named SOUND
Future Co. produces and commercializes 1 million units a year of the light notebook SPEED. The firm is considering introducing a new headset named SOUND to accompany SPEED, and it would be sold exclusively as an optional add-on with the notebooks. The firm estimates that in total it can sell 200 thousand units of SOUND together with the notebooks, and that (being so good) they will actually boost the sales of SPEED by 100 thousand units bringing them from 1 to 1.1 million units. The following is other relevant information. SPEED unit sale price $1000. SPEED unit cost $700. SOUND unit sale price $50. SOUND unit cost $40. Given all this information, what is the total expected annual increase in EBIT following the introduction of SOUND?
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