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Xerox currently sells its latest high-speed colour printer, the Xerox 300, for $369. It plans to lower the price to $299 next year. Its cost
Xerox currently sells its latest high-speed colour printer, the Xerox 300, for $369. It plans to lower the price to $299 next year. Its cost of goods sold for the Xerox 300 is $217 per unit, and this year's sales are expected to be 20, 900 units. (a) Suppose that if Xerox drops the price to $299 immediately, it can increase this year's sales by 23% to 25707.0 units. What would be the incremental impact on this year's EBIT of such a price drop? The change in EBIT will be $ (Round your answer to the nearest dollar) (b) Suppose that for each printer sold, Xerox expects additional sales of $66 per year on ink cartridges the next three years, and Xerox has a gross profit margin of 62.0% on ink cartridges. What is the incremental impact on EBIT for the next three years of a price drop this year? The change in EBIT from ink cartridge sales will be $ (Round your answer to the nearest dollar) The incremental change in EBIT for the first year is $ (Round your answer to the nearest dollar) The incremental change in EBIT for the second year is $ (Round your answer to the nearest dollar) The incremental change in EBIT for the third year is $ (Round your answer to the nearest dollar)
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