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Hyperion? Inc., currently sells its latest? high-speed colour? printer, the Hyper? 500, for $333. Its cost of goods sold for the Hyper 500 is $190 per? unit, and this? year's sales? (at the current price of $333?) are expected to be 21,000 units. Hyperion plans to lower the price of the Hyper 500 to $285 one year from now. a. Suppose Hyperion considers dropping the price to $285 ?immediately, (rather than waiting one? year). By doing so it expects to increase this? year's sales by 28% to 26,880 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 $65 per year on ink cartridges for the? three-year life of the? printer, and Hyperion has a gross profit margin of 60% 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 will be $__________. (Round to the nearest dollar.)

Financial Management, Finance

  • Category:- Financial Management
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