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

$343. It plans to lower the price to $290 next year. Its cost of goods sold for the Hyper 500 is $204 per unit, and this year's sales (at the current price of $343) are expected to be 25,100 units.

a. Suppose that if Hyperion drops the price to $290 immediately (rather than waiting one year) it can increase this year's sales by 22% to 30,622 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 $58 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin of 76% on ink cartridges. What is the incremental impact on EBIT for the next three years of such a price drop?