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Unformatted text preview: middle and rank C is the highest. Initially, there are 100 employees at rank A, 80 at rank B, and 60 at rank C. Let the economic value of an employee at ranks A, B and C be 1,2 and 3 respectively. Assume that there is no demotion and each employee advances through the ranks according to the following one year probability transition matrix P = . 4 0 . 4 0 . 1 0 . 1 . 0 0 . 5 0 . 4 0 . 1 . 0 0 . 0 0 . 8 0 . 2 . 0 0 . 0 0 . 0 1 . where X represents employees exit from the rm. What is the expected total economic value of the rm after 2 years? 4 (25) 4. Sue and Liz arrive at a beauty salon together and plan to leave together. Sue needs a perm, and Liz a manicure. The duration of a perm is exponentially distributed with rate 5 /hr ; that of a manicure is exponentially distributed with rate 10 /hr . If both are served immediately, what is expected duration one has to wait for the other? 5...
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 Fall '07
 Billings

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