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A novel Markov model is constructed to calculate the packet loss probability and the delay distribution of real-time wireless packets. These packets are transmitted through an erroneous channel modeled by a two-state Markov chain. If a packet transmission is not successful, the packet is retransmitted until a delay limit is exceeded. At that time, the packet is discarded and the transmission of the next packet begins. This packet-dropping process has a significant impact on packet loss probability but is seldom considered in other Markov models. Closed-form solutions are obtained, and simplified expressions assuming highly correlated errors and small error probability are derived. Under these conditions, it is found that the packet loss probability is significantly affected by the delay limit and the transition probability of the channel's remaining in the failure state. On the other hand, the probability is almost independent of the arrival rate provided the rate is not close to one.