The Verbatim Co. has just gone public. Under a firm commitment agreement, Verbatim received $19 for each of the 6.5 million shares sold. The initial offering price was $21.25 per share, and the stock rose to $26.45 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?