3. (eyert and Associates, 1963) Bank1 offers loans which are either paid when due Or are delayed. If the payment on a loan is delayed more than 4 quarters (1 year), Bank1 COnsiders the loan a bad debt and writes it off. TIle following table provides a sample of Bank! '8 past experience with loans.

Express Bankl's loan situation as a Markov chain.

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Loan amount Quarters late 0 $10,000 -$25,000 1 $50,000 2 $50,000 $100,000 4 Payment history $2000 paid, $3000 delayed by an extra quarter, $3000 delayed by 2 extra quarters, and the rest delayed 3 extra quarters. $4000 paid, $12,000 delayed by an extra quarter, $6000 delayed by 2 extra quarters, and the rest delayed by 3 extra quarters. $7500 paid, $15,000 delayed by an extra quarter, and the rest delayed by 2 extra quarters. $42,000 paid and the rest delayed by an extra quarter. $50,000 paid.