Northeast Electrical is a company specializing in appliances. Many of the Northeasts sales are on the instalment basis; as a result, much of the firms working capital is tied up in accounts receivable. Although most of the firms customers make their payments on time, a certain percentage of the accounts are always overdue and some few customers never pay, thereby becoming bad debts. Northeast Electricals experience is that when a customer is two or more payments behind, the account will generally turn into a bad debt. In these cases, Northeast discontinues credit to the customer and writes the account off as bad debt. At the beginning of each month, the accounts receivable manager reviews each account and classifies it as paid, currents (being paid on time), overdue (one payment behind), or bad debt. The accounts receivables manager has provided this transition matrix for the last months data and this months data:

	State of a peso this month
State of a peso last month	Paid	Current	Overdue	Bad debt
Paid	1.0	0.0	0.0	0.0
Current	0.40	0.30	0.30	0.0
Overdue	0.50	0.20	0.20	0.10
Bad debt	0.0	0.0	0.0	1.0

If Northeast now has P20000 in the current category and P14000 in the overdue classification, how much will eventually be paid and how much should it plan to write off as bad debts?

What is the average number of months it will take before a current amount is paid?

*What percentage of firms will pass each category in the long run?