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

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

The change in EBIT from ink cartridge sales will be

The incremental change in EBIT for the first year is