To find the dividend of a share of preferred stock given its market price and the discount rate, you can use the formula for the price of preferred stock:
\[ P = \frac{D}{r} \]
Where:
- \(P\) is the price of the stock (in this case, $27.93),
- \(D\) is the annual dividend,
- \(r\) is the discount rate (in this case, 7.14% or 0.0714).
You can rearrange the formula to solve for the dividend \(D\):
\[ D = P \times r \]
Now, substituting the known values:
\[ D = 27.93 \times 0.0714 \]
Calculating this gives:
\[ D \approx 1.996622 \]
Rounding to two decimal places, the annual dividend is approximately $2.00.