Assume Adams Distributors' Operating Expenses are essentially fixed-that is, they will not change significantly in the case of either an increase or decrease in sales. Assume also that competition prevents Adams from increasing its prices and also from finding cheaper goods to sell, so that the Gross Profit ratio (percentage) is also fixed constant at any level of sales.

1. If Adams is able to increase Net Sales by 20%, what will be the impact on its net income before taxes?