Calculating Flotation Costs. The Verbatim Co. has just gone public. Under a firm commitment agreement, Verbatim received $20.15 for each of the 6.5 million shares sold. The initial offering price was $22 per share, and the stock rose to $28.51 per share in the first few minutes of trading. Verbatim paid $900,000 in legal and other direct costs and $175,000 in indirect costs. What was the flotation cost as a percentage of funds raised?
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