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Linear AlgebraHardMarkov Chains & Long-Run Behavior

Markov Chains & Long-Run Behavior · Hard problem

An insurance claim is modelled as an absorbing Markov chain. Each day a Filed claim either moves to Review (probability 3/53/5) or stays Filed (probability 2/52/5); a claim under Review is resolved (probability 7/107/10, absorbing) or stays under Review (probability 3/103/10). Staff time costs $100\$100 for each day a claim is Filed and $140\$140 for each day it is under Review. Starting with a newly Filed claim, what is the expected total staff-time cost until it is resolved? Express your answer as a common fraction.