Twenty five percent of a firms account receivable are past d

Twenty five percent of a firm\'s account receivable are past due. What is the probability that out of eight accounts;

A.) none of the accounts will be past due

B.) Two or less will be past due

Solution

P(firm\'s account receivable are past due) =0.25

P(A) = 0.75*0.75....8 times= (0.75)^8 = 0.10011

P(B) = 0.25*0.25* (0.75)^6 + 0.25*(0.75)^7 +(0.75)^8 = 0.01112+0.03337+0.10011=0.1446