I need help to set up a transition matrix for the following problem
"A video cassette recorder manufacturer is so certain of its quality control that its offering a complete replacement warranty if a recorder fails within 2 years. Based upon compiled data, the company has noted that only 1% of its recorders fail during the first year, whereas 5% of the recorders that survive the first year will fail during the second year. The warranty does not cover replacement orders
a Formulate the evolution of the status as a Markov Chain whose states include two absorption states that involve needing to honor the warranty or having the recorder survive the warranty period. Then construct the (one-step) transition matrix"
I am sorry this problem is so wordy, but I have no idea how to set the transition matrix. I'm guessing that there are 4 states, 0 being a new replacement recorder has to be absorbing and 3 being survived the recorder past the warranty has to be also absorbing.