The flotation cost as a percentage of the funds raised

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Deep Hollow Oil issued 135,000 shares of stock last week. The underwriters charged a spread of 8.05 percent in exchange for agreeing to a firm commitment. The legal and accounting fees amounted to $418,000 and the company incurred $48,000 in indirect costs. The offer price was $33 a share. Within the first hour of trading, the stock price increased to $36 a share. What was the flotation cost as a percentage of the funds raised?

A. 28.89 percent B. 33.03 percent C. 26.47 percent D. 20.55 percent E. 33.87 percent

Reference no: EM131354964

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