The Only Car Dealership in a Community Stocks Cars from Two

question 8

Short Answer

The only car dealership in a community stocks cars from two manufacturers, Fret and Cessy. The following transition matrix shows the probabilities of a customer purchasing each brand of car in the next year given that he or she purchased that car in the current year. $$\begin{array} { l c c c } \text { From } / & \text { To } & \text { Fret } & \text { Cessy } \\\hline \text { Fret } & & .7 & .3 \\\text { Cessy } & & .4 & .6 \\\hline\end{array}$$
Determine the steady state probabilities for Fret and Cessy.

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Definitions:

Straight Line Amortization

A method of allocating the cost of an intangible asset evenly over its useful life.

Unrealized Profits

are profits that have been earned but not yet realized through a transaction, such as an increase in value of unsold stocks.

After-Tax Dollar Value

The amount of money left after federal, state, and other governmental taxes have been deducted.

Tax Rate

The percentage at which an individual or corporation is taxed on their income or profits.