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Based on its experience, a department store has developed the following table for the transition probabilities for accounts moving during a 1-month period from either
Based on its experience, a department store has developed the following table for the transition probabilities for accounts moving during a 1-month period from either of the two transient categories into one of the four possible categories. Answer all the questions.
Initial Category | Category After 1 Week | |||
Paid | Bad -debt | 0- to 30-Day | 31- to 90-Day | |
Paid | 1.00 | 0.00 | 0.00 | 0.00 |
Bad-debt | 0.00 | 1.00 | 0.00 | 0.00 |
0- to 30-Day | 0.55 | 0.00 | 0.10 | 0.35 |
31- to 90-Day | 0.65 | 0.11 | 0.20 | 0.04 |
- What percentage of the accounts in the two transient categories will eventually be paid, and what percentage will end up as bad debts?
- If the amounts in the two transient categories at the beginning of June are Php2,150,000 and Php3,690,000, what amounts will eventually be paid?
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