Question: Mayo Corp. has just completed an initial public offering. The firm sold three million shares at an offer price of $8 per share. The underwriting

Mayo Corp. has just completed an initial public offering. The firm sold three million shares at an offer price of $8 per share. The underwriting spread was $.50 a share. The price of the stock closed at $11 per share at the end of the first day of trading. The firm incurred $100,000 in legal, administrative, and other costs. What were flotation costs as a fraction of funds raised?

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