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

$350.

Its cost of goods sold for the Hyper 500 is

$200

per unit, and this year's sales(at the current price of

$350)

are expected to be

20,000

units. Hyperion plans to lower the price of the Hyper 500 to

$300

one year from now.a. Suppose Hyperion considers dropping the price to

$300

immediately, (rather than waiting one year). By doing so, it expects to increase this year's sales by

25%

to

25,000

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

$75

per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin of

70%

on ink cartridges. What is the incremental impact on EBIT for the next three years of dropping the price immediately (rather than waiting oneyear)?

a. Suppose Hyperion considers dropping the price to

$300

immediately, (rather than waiting one year). By doing so, it expects to increase this year's sales by

25%

to

25,000

units. What would be the incremental impact on this year's EBIT of such a price drop?The change in EBIT will be

$

One year ago, your company purchased a machine used in manufacturing for

$110,000.

You have learned that a new machine is available that offers many advantages and you can purchase it for

$150,000

today. It will be depreciated on a straight-line basis over 10 years and has no salvage value. You expect that the new machine will produce a gross margin (revenues minus operating expenses other than depreciation) of

$40,000

per year for the next 10 years. The current machine is expected to produce a gross margin of

$20,000

per year. The current machine is being depreciated on a straight-line basis over a useful life of 11 years, and has no salvage value, so depreciation expense for the current machine is

$10,000

per year. The market value today of the current machine is

$50,000.

Your company's tax rate is

25%,

and the opportunity cost of capital for this type of equipment is

10%.

Should your company replace its year-old machine?

The NPV of replacing the year-old machine is

$enter your response here