You are the accounts receivable manager of Occidental Steel

You are the accounts receivable manager of Occidental Steel, Inc You know from past experience that 10 percent of your accounts receivables are overdue at any time and are a continuing source of concern for your boss You have four accounts receivable statements on your desk as she passes one morning She instructs you to bring a couple of those statements into my office, and let\'s get going. You know that if you show up with an overdue statement, she will probably fire you on the spot. What is the probability that of the two statements you have taken in to her, one or both will be past due?

Solution

10% are overdue

So, p(overdue) = 0.1

p(not overdue) = 0.9

p(one or both overdue) = 1 - p(neither overdue)

1 - (0.9)^2

1 - 0.81

0.19 ---> ANSWER