brainsX

^I don't know what you're referring to with "expense" in your FV of plan assets formula, but as far as I know, that's wrong.

C is clearly correct because an increase in expected return has no effect on plan assets. As you can see in your formula, actual return is there. The 2nd part of choice A is correct. If expected return inreases, this drives down pension expense. If pension expense is lower, net income is higher.