Expected rate of return on the endowment

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Endowment at WestMount University decreased by $1 billion following a meltdown in the stock market. Prior to the stock market losses, the University had a balanced budget. Now, the University does not hope that the market will recover. Assuming that the University will remain open and that long-term interest rate (expected rate of return on the endowment) remains at 4%, by how much should WestMount University lower annual spending to balance its books?

Reference no: EM13972259

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