Question
Can someone please give me the correct Flotation cost percentage. Thank You.
The Wiley Oakley Co, has just gone public. Under a firm commitment agreement, Wiley Oakley received $20.35 for each of the 6.52 million shares sold. The initial offering price was $22.20 per share, and the stock rose to $28.71 per share in the first few minutes of trading. Wiley Oakley paid $902,000 in legal and other direct costs and $177,000 in indirect costs. (Enter your answer as directed, but do not round intermediate calculations.) Required: What was the flotation cost as a percentage of funds raised? (Enter your anser as a percentage rounded to 2 decimal places (e.g., 32.16).) Flotation cost percentage
Explanation / Answer
Proceeds from issue to company = 33 x 4200000
= $138,600,000
Total cost to company = Underwriting cost + Legal and direct cost + Indirect costs
= (2.40 x 4200000) + 915000 + 270000
= $11,265,000
Flotation cost = 11265000 / 138600000
= 8.13%