11. [Taxable pension plans] Principal Financial [PFG] reported in its 2000 annual report that the expected return on plan assets was 5% for taxable plans and 8.1% for nontaxable plans.

a. Explain why a different return on assets assumption is re- quired for taxable plans.

b. Compute the implied income tax rate on taxable plans, as- suming no other difference between taxable and nontaxable plans

c. Discuss why Principal may have chosen to find these plans despite their taxable status.