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The Telwar Company has just gone public. Under a firm commitment agreement, the company
received $15.70 for each of the 10 million shares sold. The initial offering price was $19.10 per
share and the stock
rose to $21.00 per share in the first few minutes of trading. The company paid $740,000 in direct
legal and other costs and $270,000 in indirect costs.
What was the flotation cost as a percentage of funds raised?

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