Hyperion Inc., currently sells its latest high-speed colour printer, the Hyper 500, for $345. Its cost of goods sold for the Hyper 500 is $197 per unit, and this years sales (at the current price of $345) are expected to be 23,000 units. Hyperion plans to lower the price of the Hyper 500 to $296 one year from now.

a. Suppose Hyperion considers dropping the price to $296 immediately, (rather than waiting one year). By doing so it expects to increase this years sales by 26% to 28,980 units. What would be the incremental impact on this years EBIT of such a price drop?

b. Suppose that for each printer sold, Hyperion expects additional sales of $67 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin of 73% 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?)

a. The change in EBIT will be $-? (Round to the nearest dollar.)

b. The change in EBIT from ink cartridge sales will be $? (Round to the nearest dollar.)

c. The incremental change in EBIT for the first year is $-? (Round to the nearest dollar.)

d. The incremental change in EBIT for the second year is $? (Round to the nearest dollar.)