Table 14-3 The Following Data Consists of a Matrix of Transition Probabilities

question 6

Multiple Choice

Table 14-3
The following data consists of a matrix of transition probabilities (P) of three office locations (A,B,C) within a large company and how employees shift from one location to the other from year to year.The company CEO would like to understand the movement of employees over time and the long-run proportion of employees in each location.Assume that there is always a total of 3000 employees.
A B C
P = π(0) = [1000, 1000, 1000)
-Using the data given in Table 14-3, how many employees do we expect in location A two years from now?

• A)1000
• B)1400
• C)1420
• D)1500

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Definitions:

Simple Rate Of Return

A calculation that measures the profitability of an investment as the annual incremental net operating income divided by the initial investment cost.

Sales Revenues

The total amount of money generated from the sale of goods or services by a company before any costs or expenses are subtracted.

Cash Operating Expenses

Expenses that a company pays in cash during an accounting period, excluding non-cash expenses such as depreciation.

Net Present Value

A financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess the profitability of an investment.