The Transition Matrix Below Shows the Probabilities That Customer Switch

question 39

Multiple Choice

The transition matrix below shows the probabilities that customer switch between two grocery stores, Don's and Limmer's, each week. $$\begin{array}{l}~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\text { Next Week }\\\begin{array} { l c c } \text { This Week } & \text { Don's } & \text { Limmer's } \\\hline \text { Don's } & 0.9 & 0.1 \\\text { Limmer's } & 0.2 & 0.8\end{array}\end{array}$$ If there are 2000 customers who shop at either store, how many over the long run would shop at Limmer's?

• A) 333
• B) 400
• C) 667
• D) 1000
• E) 1600

---

Definitions:

Growth Rate

A measure of how much a particular variable, such as revenue, profit, or investment value, increases over a specific period.

WACC

The Weighted Average Cost of Capital measures a corporation's capital costs by proportionally weighting each capital category involved.

Capital Budgeting

The process a business undertakes to evaluate and select long-term investments that are likely to pay off over several years.

Divisional Cost

Costs that are attributed to a specific division within a company, often used for measuring the division's performance and profitability.