At any time n the assignment is in one of 3 states
- Smarty Pants owns the assignment.
- Someone else owns the assignment and got it from Smarty Pants.
- Someone else owns the assignment and got it from someone else.
Let's define the probability of each state after n transfers:
$p_{n,s} = P(assignment\ is\ in\ state\ s\ after\ n\ tranfers)$
$p_{0,1} = 1,\ p_{0,2} = p_{0,3} = 0$
From state $1$ the assignment always goes to state $2$. From state $2$ the assignment always goes to state $3$. From state $3$, it goes to state $1$ with probability $1\over 8$ and to state $3$ with probability $7\over 8$. This translates to the formulas:
$p_{n+1,1} = {1\over 8} p_{n,3}$
$p_{n+1,2} = p_{n,1}$
$p_{n+1,3} = p_{n,2} + {7\over 8} p_{n,3}$
We can compute the first 3 transfers:
$p_{0,1} = 1,\ p_{0,2} = p_{0,3} = 0$
$p_{1,1} = 0,\ p_{1,2} = 1,\ p_{1,3} = 0$
$p_{2,1} = 0,\ p_{2,2} = 0,\ p_{2,3} = 1$
$p_{3,1} = {1\over 8},\ p_{3,2} = 0,\ p_{3,3} = {7\over 8}$
And we have the answers:
C
Smarty Pants gets it back after 3 transfers with probability $p_{3,1} = {1\over 8}$.
B
Other teams have the assignment after 3 transfers with probability $p_{3,3} = {7\over 8}$ collectively. Each of the 9 teams has it with probability ${7\over 8}\times{1\over 9} = {7\over72}$
A
As everybody else already mentioned, the first step has 9 possibilities, the others 8, so the number of paths for the assignment is $8\times 9^{n-1}$