A share of preferred stock pays a specific dividend on a specific schedule for as long as the issuing company exists. Assume that a share of preferred stock pays an annual per-share dividend of $6.75 at the end of each year. The present value of this share of preferred stock is $75.62. Assume that the company paying the dividends will exist forever. What interest rate or rate of return does this dividend and price represent?

Explanation: r = A/PV