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johnpaech johnpaech
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5 years ago
Suppose that if GSI drops the price on the Glucoscan 3000 immediately, it can increase sales over the next year by 30% to 130,000 units.  The incremental impact of this price drop on the firms EBIT is closest to:
A) a decline of 1.5 million.
B) an increase of 1.5 million.
C) a decline of 2.4 million.
D) an increase of 2.4 million.
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
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EgorGruzdevEgorGruzdev
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#1
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5 years ago
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More solutions for this book are available here
A
Explanation:  A) Without price cut = 100,000 units × ($129 - 50) = $7,900,000
With price cut = 130,000 units × ($99 - 50) = $6,370,000
So, incremental = 6,370,000 - 7,900,000 = -1,530,000
1

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johnpaech Author
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#2
4 years ago
Really appreciate the help
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