Moonscape has just completed an initial public offering. The firm sold 3
million shares at an offer price of $10 per share. The underwriting
spread was $.7 a share. The price of the stock closed at $16 per share
at the end of the first day of trading. The firm incurred $400,000 in
legal, administrative, and other costs.
Required:
What were flotation costs as a fraction of funds raised?
