Eren and Mikasa are both age 47 and anticipate retiring when they are both age 66. With your help, they have determined that their retirement income shortfall, in todays valus is USD35,000. They want to plan for a 30-year retirement period since longevity runs in their families. Assuming a 6.5% rate of return, and an inflation rate of 3%.

Eren also has been investing in Project Razer which has projected returns under three different scenarios as follows:

Economic Conditions	Projected Return (%)	Probability of Event (%)
Favorable	30	20
Normal	15	60
Unfavorable	-2	20

Required:

1. Determine the lump-sum amount they would need at the beginning of retirement to fund this income shortfall using the capital liquidation method.

2. Determine the expected return of Project Razer.

3. Determine the standard deviation of Project Razer.